RBI Resumes Bond Purchases to Inject Liquidity, Soften Yields

Imagine the government needs to borrow money, and it does this by selling special IOUs called bonds.

The central bank, called the Reserve Bank of India (RBI), sometimes buys these bonds to put more money into the banks.

The RBI had stopped doing this for a while but has now started buying bonds again.

They bought a good amount of bonds recently.

This action helps lower the 'interest rate' that the government has to pay on its borrowing, making it cheaper for the government to get money.

Market watchers think the RBI will keep doing this for a bit longer because there might not be enough buyers for all the government's bonds.

They expect the RBI to continue these actions, possibly buying even more bonds later.