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- Raghuram Rajan says he doesn’t plan to apply for top job at Bank of England
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RBI Governor Raghuram Rajan on Friday proposed to create a bullet-proof national balance sheet and growth agenda,which creates confidence in citizens and investors alike,regardless of what US Federal Reserve does.
The postponement of tapering is only that,a postponement. I do think,short term,it has in a sense postponed some of the concerns. My sense is that the markets were quite prepared for a moderate tapering. And,what this has done is,in a sense,it has again created the possibility of uncertainty down the line, Rajan said after unveiling his first mid-quarter monetary policy.
We need that stabilisation regardless of what the Fed does. Because,if we are stabilised,we are better prepared for the tapering whenever it happens. What we need to do is put our house in order before it comes back, he told reporters. Excerpts from the press meet:
ON RECENT MEASURES: I am glad to say that banks have started bringing in money. Till yesterday,we had received $466 million through the FCNR(B) and $917 million through the swap facility to a total of nearly $1.4 billion.
WHY REPO RATE WAS HIKED: The objective is to normalise the conduct and operations of monetary policy so as to allow the repo rate to resume its role as the operational policy interest rate. It should be consistent with inflationary conditions in the economy.
ON GROWTH: Growth has weakened with continuing sluggishness in industrial activity and services. The pace of infrastructure project completion is subdued and new project starts remain muted. Some pick-up is expected on account of brightening prospects for agriculture due to kharif output and the upturn in exports.
INFLATION RISING AGAIN: WPI inflation,which had eased in Q1 of 2013-14,has started rising again as the pass-through of fuel price increases has been compounded by the sharp depreciation of the rupee and rising international commodity prices. You always have to balance the state of the economy with your fight against inflation. What I would like to see is that we achieve,certainly,the RBIs target of trying to bring WPI inflation below 5 per cent.
ON PARTIAL WITHDRAWAL: The calibrated withdrawal will provide a boost to growth,reduce the financing distortions in the market,and reduce the strain on balance sheets.