NEW DELHI: After the Narendra Modi government extended the coronavirus lockdown till May 3, Reserve Bank of India (RBI) Governor Shaktikanta Das will make some important announcements at 10 am today. He is likely to announce some fresh measures to cushion the economy during lockdown 2.0.
In the meantime, Finance Minister Nirmala Sitharaman is also expected announce a fiscal stimulus package to revive the economy today.
The RBI has not disclosed the subject of the governor’s address, which will be broadcast on YouTube at 10 am.
The government is slated to sell ₹20,000 crore of bonds today. Its first auction of ₹19,000 crore was unexpectedly fully subscribed as investors bought on expectations that the RBI would purchase more debt in the secondary market to cap rising yields.
“Every successive auction will see less demand in a market that’s completely dislocated if the RBI doesn’t step in,” Vijay Sharma, executive vice president for fixed-income at PNB Gilts Ltd. said before the RBI announcement. “The sell-off in bonds can get much uglier.”
While central banks in Australia and New Zealand have embarked on massive bond purchases, capping borrowing costs, the RBI has largely refrained from the measures. As a result, India’s benchmark 10-year bond yield has climbed 30 basis points so far in April, set for its biggest monthly rise in two years.
Last month, RBI had cut the benchmark repurchase rate by 75 basis points to 4.40% from 5.15% by preponing a meeting of the Monetary Policy Committee (MPC). The central bank had also announced measures to inject rupee liquidity through long term repo operations. Other measures include reduction of cash reserve ratio (CRR) to 3% from 4%.