Journalism of Courage
A day after raising the repo rate for a second consecutive month,Reserve Bank Governor Raghuram Rajan said the RBI may have done enough on rate hikes and will need to assess their impact on the economy.
I wont say that we have a set of rate hikes in mind. We think we have done enough given what we know about the economy to wait and watch and see what happens, Rajan said in a conference call with analysts here.
On the currency,Rajan said he would consider the rupee to be stable only when dollar demand from oil companies returns to the market. The special swap window provided by the central bank to meet their dollar requirements would be tapered gradually,he said.
Rajan said the RBI would take a call on liquidity management only when the operational rate comes down to the repo rate.
On Tuesday,Rajan had said,If our projections on inflation and data do not quite match,then we will be induced to take further steps. Actions taken by the RBI should be helpful at this point while future action will depend on data. One should not assume that the next rate move will be upwards.
On US Fed unwinding,Rajan said India now is in a better position to face the unwinding of its easy money policy whenever it takes place.
We are in a better position to face tapering as and when it occurs, he said.
Regarding the current account deficit,Rajan said,I think we have shown that whatever the CAD is,we can finance it,if necessary from outside money. I think the picture has changed a little from what it was in May when our CAD was blowing out and there were lots of concern about it.
With agencies
