..........Almost everyone has welcomed the easing. After all, something is better than nothing. However, much less appreciated is that in its policy statement the RBI has been consistent in being inconsistent. There seems to be a pattern of inconsistency in the RBI’s actions and the related analysis/guidance. Thus, for example, when it wants to communicate a hawkish tone, it’ll often hide behind the uncomfortably high Consumer Price Index (CPI) inflation. In contrast, when it wants to ease or sound dovish, it barely even bothers to extract any message from the CPI inflation...........
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1 comment:
Let us not expect too much from the graceful action by RBI meant probably to break the stalemate in governance in the financial sector caused by FM and RBI giving an impression that there was more than the permissible levels of ‘give and take’ between them and media and analysts started worrying only about base rates and inflation.
Let us look at this from a different angle. RBI has, for once, being a mature organisation, decided to take FM along, as the ‘walking alone’ by FM was taking economy into wilderness. A 0.25 percentage point reduction each in repo rate and CRR was in the context of both FM and RBI Governor having reconciled to the fact that GOI and RBI can ill-afford wasting the pre-Budget and post-Budget days arguing about the pros and cons of tinkering with base rates or the rights and wrongs of easing out Deputy Governor Gokarn.
There are more important responsibilities waiting for GOI and RBI to concentrate, in the coming days/weeks. Let us appreciate the maturity shown by Governor Dr Subbarao and hope that wiser counsel will prevail upon those in charge of managing the economy.
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