RBI Governor Shaktikanta Das has said that RBI has many provisions to provide cushion to the sagging economy, however, that will completely depend on the circumstances.
RBI Governor Shaktikanta Das has said that RBI has many provisions to provide cushion to the sagging economy, however, that will completely depend on the circumstances. Shaktikanta Das said that the Reserve Bank’s responses are calibrated and it makes sure that whatever decision RBI makes, they do have the desired effect and optimum impact. Also, he announced that the RBI will use various policies from time to time as per requirement. While businesses across the countries have taken a hit, the RBI governor said that electronics, drugs, pharmaceuticals, and the chemical sector has more exposure to China and thus they are at a higher risk. He said that the next adverse effect can be visible as a further slowdown in domestic economic growth.
In today’s press conference, Shaktikanta Das did not make an announcement on the rate cuts even when many advanced economies have gone for it, however, he added that he is not ruling out any possibility. On March 15, 2020, the US Fed slashed benchmark interest rate by a percentage point to near zero in an attempt to offset the negative impact of the COVID-19 outbreak on the US economy. The Fed also purchased another $700 billion worth of treasury bonds and mortgage-backed securities.
In addition, it entered into an agreement with five other foreign central banks, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, to cut their rates on currency swaps to keep the financial markets functioning normally.
The Bank of Japan too doubled purchases of ETFs on Monday and increased purchases of corporate bonds and commercial paper. Meanwhile, top Reserve Bank of India (RBI) officials, including governor Shaktikanta Das and his deputies recently met heads of several large public sector banks (PSBs). The credit growth was on top of the agenda in the post-policy meeting with banks.