New RBI boss has made the right noises, making markets smile again

.....The government, as former Governor, D Subbarao, constantly reminded us, must play its part and push through politically tough reforms needed to fix the economy. We are under the constant threat of a sovereign rating downgrade and our credit rating is just one notch above junk status. By the time Rajan makes the first monetary policy statement of his term on September 20, the US Fed would have taken a final call on tapering of quantitative easing. Markets will, meanwhile, keep waiting for what he promised in the first speech — a broader roadmap of reforms. Will RBI reverse the trend and cut policy rates in its next monetary policy review? If that happens, it will be a big step for Rajan in the many long strides he must take to push India’s economic growth.

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