Why was the buffer for further monetary policy easing so limited? One way to answer this is by taking a longer-term perspective and disentangling nominal long-term interest rates into three constituent parts: (i) expected average inflation2, (ii) expected average real rate over the lifespan of a bond, (iii) real term premia, representing the compensation investors require for holding onto a long-term asset.
The aggregate quantum for the facility was around Rs. 200 billion (USD 4 billion) and the interest rate was the LOLR rate for banks.