RBI governor Raghuram Rajan asserted his independence from the govt on Friday. Photo: Ramesh Pathania/Mint
Mumbai: India's monetary policy decisions, including setting the benchmark interest rate, are taken by the central bank independently, governor Raghuram Rajan said.
"We control, of course, the monetary policy," Rajan said in reply to a question in St. Gallen, Switzerland on Friday. "I determine the monetary policy. I say what it is. Ultimately the interest rate that is set, is set by me."
The comments come as most opinion polls predict Narendra Modi's opposition Bharatiya Janata Party will win most of the 543 seats up for grabs in the Indian elections ending 16 May, while falling short of a majority. Rajan's job will be safe under a BJP-led government, party treasurer Piyush Goyal said in an 27 April interview.
Rajan has raised the benchmark rate by 75 basis points to 8% since taking charge of the Reserve Bank of India in September and said controlling inflation is crucial to reviving growth from a decade low. Price pressures and slowing economic expansion have eroded the popularity of Prime Minister Manmohan Singh's Congress party.
The rupee rose 0.1% to 60.025 against the dollar in Mumbai on Friday, while the benchmark Sensex climbed 2.9%. The yield on the 10-year government bond maturing November 2023 fell one basis point to 8.75%.
Asia's third-largest economy probably expanded 4.9% in the year ended 31 March, near the previous year's 4.5%, which was the slowest since 2003, according to official estimates. The budget deficit narrowed to 4.6% from 4.9% in the previous 12 months.
Respect Rajan
"Any administration that takes power must respect Rajan's appointment as central bank governor," finance minister P. Chidambaram said in a 3 May interview in Astana, Kazakhstan. "The RBI has been pretty balanced in maintaining price stability," he added.
Consumer prices rose 8.31% in March from a year earlier, the fastest pace among the biggest emerging markets.
"We need to bring down inflation, without that we won't get sustainable growth," Rajan said on Friday. "I don't think there is an inflation-growth trade off, which some people talk about. Once we bring down inflation, for which we've indicated a path, then we can talk about the rest of what monetary policy can do."
Rajan sparred with former Federal Reserve chairman Ben Bernanke in Washington last month over how much international policy coordination is needed at a time when the Fed is slowing asset purchases and the European Central Bank is debating whether to begin its own quantitative easing programme. Rajan has said that the US should do more to take into account the impact of its actions on other countries.
The Fed considers developments in emerging markets when formulating policy, Bernanke said in an 15 April speech in Mumbai. Bloomberg
via Business - Google News http://ift.tt/1m9XPp4
Put the internet to work for you.
0 comments:
Post a Comment