Coronavirus driven recession looms large over India

India`s Central bank, Reserve Bank of India governor Shaktikanta Das on Monday announced measures to boost liquidity in the foreign exchange and domestic markets, even as he stopped short of cutting interest rates unlike his global peers. The Reserve Bank of India will conduct long-term repo operations worth up to ₹1 trillion at the current policy rate and do another forex swap on the 23rd of March to provide dollar liquidity to the market. The steps though, fell short of investors` expectations. Das said that RBI stands ready to act and the rate cut decision will be taken by the monetary policy committee (MPC) which is slated to meet next month. He added that policy space should be used appropriately and be suitably timed to optimize impact. The market has been speculating about an imminent rate cut from RBI after central banks across the world took a series of stimulus measures to shield their economies from the impact of the coronavirus pandemic. While India could be impacted due to the slowdown in global growth which stands reduced to 0.4-1.5%, the quantum of impact might be assessed at the MPC meeting next month. India has already reported over 100 cases of the novel coronavirus pandemic, leading to a lockdown across several states.

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