By claiming CRR is a less powerful monetary instrument, the RBI laid the foundation of its anti-growth image today
The Reserve Bank of India (RBI) Governor has received his fair share of plaudits for resisting what the markets read to be pressure from North Block to cut the repo rate in the October monetary policy. The endorsement seems legitimate to some. If indeed Governor Subbarao was perceived to have kowtowed to the finance minister, this could have damaged the central bank’s credibility in the long term. The bigger question, however, is: can defending the central bank’s autonomy be an end in itself? Or should the governor have acted differently in the interest of the economy and cut the policy rate instead, raised eyebrows over autonomy and independence be damned?.......
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