Rajan leaves India rates unchanged

With the Monetary Policy Committee framework on the anvil, wherein shaping of the policy will shift to the panel, this might also be the last of the Governor-led policy announcements at Mint Street. “You can interpret them any which ways you want”, Rajan said at an interaction with select news agencies here this evening.

Bilkulonline.com, Mumbai, Aug 9: The Reserve Bank of India (RBI) has nominated its Executive Director Michael Patra to the proposed Monetary Policy Committee (MPC), Governor Raghuram Rajan said here.

RBI Governor Raghuram Rajan on Tuesday exuded confidence that inflation target of 5 per cent for March 2017 will be met as also that there will be no market disruption on account of foreign deposit redemptions worth over United States dollars 20 billion. “I have said “no” when I think it is in the best interest of the country”, he said. Besides, he exuded confidence that inflation target of 5 per cent for March 2017 will be met as also that there will be no market disruption on account of foreign deposit redemptions over $20 billion.

“Earlier, some bankers said it was the lack of liquidity that was holding rates high, now I hear from some that it is fear of the foreign currency non-resident (bank) – FCNR (B) – deposit redemptions that is making them reluctant to cut rates”.

“The term of Rajan is concluding on September 5”.

In interviews to TV channels, including ET Now and CNBC-TV18, a day after his last policy update, Rajan said 90-95 percent of the tasks he had set for himself had been completed, though he would have also liked to finish the remaining agenda, notably the clean-up of banks’ balance sheets.

Central bank governor Raghuram Rajan.

After confirming that he was keeping rates on hold to check inflation, Rajan staunchly defended his time in office during which he has faced severe criticism from allies of Prime Minister Narendra Modi.

The government last week formally adopted Rajan´s consumer price inflation target of 4 percent with a plus or minus 2 percent band, having convinced the government that it will anchor policy in a country with a history of volatile prices.

Although consumer inflation touched a 22-month high in June, reports of above-average rains in the annual June-to-September monsoon season might provide some relief – particularly after the first back-to-back droughts in nearly three decades. “Wherever we had to say “no”, I have never anxious about reappointment, or about whether I will have a future career in the government or anywhere else”.

Rajan, who plans to return to academia after his term ends on September 4, said that his stay at university made him pretty thick-skinned, but the attacks then were not abominable.

However, he said that he was never anxious about reappointment or a future career in government, and served the best interests of the country as a team player.