Raghuram Rajan's first monetary policy today: Can he please all?

September 20, 2013

Raghuram_Rajan

New Delhi, Sep 20: Reserve Bank governor Raghuram Rajan faces his first big test today as he delivers his maiden monetary policy. Having won universal applause for his "rupee speech", which resulted in a dramatic change in Street sentiments, there's hope that Dr Rajan will roll back some of the emergency measures, announced in July, that have been hurting Indian Inc.

Ben Bernanke's surprise decision on Wednesday not to wind down its massive monetary stimulus has come as a shot in arm for Dr Rajan as the pressure on rupee has eased considerably. However, the Fed's decision also means that expectations have risen manifold.

The biggest challenge for Dr Rajan will be to spell out a policy that is consistent with his hardline views on inflation, and also takes into consideration India' stuttering growth, which hit a decade low in the last fiscal.

With retail inflation around the double-digit mark and headline inflation at a 6-month high, Dr Rajan is unlikely to lower the benchmark repo rate, which currently stands at 7.25 per cent. He is also unlikely to tinker with the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.

"There is a change of guard, so we don't know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery," said Rajeev Malik, senior economist at CLSA in Singapore.

A status quo would disappoint the banking industry and millions of consumers who are struggling under the burden of high Equated Monthly Installments (EMIs). With peak festival season around the corner, demand for loans is expected to go up.

"We have made our recommendations for releasing the liquidity, making it more accessible, making it less expensive," State Bank of India (SBI) Chairman Pratip Chaudhuri said.

But, economists say holding rates will be the best step for India under current circumstance.

"We expect the RBI to keep all policy rates (repo, CRR) unchanged, in line with consensus; sound hawkish on near-term inflation risks due to supply shocks emanating from food and rupee," Nomura analyst Sonal Varma said.

What Dr Rajan is expected to do is to scale back the tight liquidity measures that have helped the rupee bounce from a record low. Dr Rajan is widely expected to leave the marginal standing facility (MSF) unchanged, a Reuters poll showed. The overnight rate is generally viewed as the central bank's effective policy rate now, since it is the major interest rate tool being used to support the rupee.

The central bank jacked it up by 200 basis points in July to 10.25 per cent so that it stood 300 basis points above the official policy repo rate, aiming to tighten market liquidity and make it more expensive to speculate against the rupee.

Still, A. Prasanna, economist at ICICI Securities Primary Dealership Ltd in Mumbai, said it was a 50/50 call as to whether Rajan cuts the MSF to 9.25 per cent.

Several economists expect Dr Rajan to reverse some of the other rupee-supporting steps. He might relax a requirement that banks meet 99 per cent of their cash reserve ratio on a daily basis. The minimum was increased from 70 per cent previously, which drained liquidity from money markets but also choked off credit.

"Out-of-the-box solutions"

India Inc. is looking forward to some unconventional measures from Dr Rajan.

"We expect the new RBI governor to initiate measures that would enthuse the market participants, boost investor sentiment and bring confidence back in the economy," said Sidharth Birla, senior vice president of industry body Ficci.

Better communications:

In his first-day press conference, Dr Rajan spoke of the need for communication and a "clear framework" as to where the central bank is headed.

"We need a more comprehensive policy statement from the RBI underlining the outlook on inflation and guidance around the future of monetary policy framework, especially with regards to inflation targeting," said Gaurav Kapur, senior economist at Royal Bank of Scotland.

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Raghuram Rajan's first monetary policy today: Can he please all?

New Delhi, Sep 20: Reserve Bank governor Raghuram Rajan faces his first big test today as he delivers his maiden monetary policy. Having won universal applause for his "rupee speech", which resulted in a dramatic change in Street sentiments, there's hope that Dr Rajan will roll back some of the emergency measures, announced in July, that have been hurting Indian Inc.

Ben Bernanke's surprise decision on Wednesday not to wind down its massive monetary stimulus has come as a shot in arm for Dr Rajan as the pressure on rupee has eased considerably. However, the Fed's decision also means that expectations have risen manifold.

The biggest challenge for Dr Rajan will be to spell out a policy that is consistent with his hardline views on inflation, and also takes into consideration India' stuttering growth, which hit a decade low in the last fiscal.

With retail inflation around the double-digit mark and headline inflation at a 6-month high, Dr Rajan is unlikely to lower the benchmark repo rate, which currently stands at 7.25 per cent. He is also unlikely to tinker with the cash reserve ratio, or the portion of deposits banks have to maintain with the central bank, unchanged at 4 per cent.

"There is a change of guard, so we don't know what the flavour will be, but Rajan is likely to be hawkish and reiterate the importance of low and stable inflation for sustained economic recovery," said Rajeev Malik, senior economist at CLSA in Singapore.

A status quo would disappoint the banking industry and millions of consumers who are struggling under the burden of high Equated Monthly Installments (EMIs). With peak festival season around the corner, demand for loans is expected to go up.

"We have made our recommendations for releasing the liquidity, making it more accessible, making it less expensive," State Bank of India (SBI) Chairman Pratip Chaudhuri said.

But, economists say holding rates will be the best step for India under current circumstance.

"We expect the RBI to keep all policy rates (repo, CRR) unchanged, in line with consensus; sound hawkish on near-term inflation risks due to supply shocks emanating from food and rupee," Nomura analyst Sonal Varma said.

What Dr Rajan is expected to do is to scale back the tight liquidity measures that have helped the rupee bounce from a record low. Dr Rajan is widely expected to leave the marginal standing facility (MSF) unchanged, a Reuters poll showed. The overnight rate is generally viewed as the central bank's effective policy rate now, since it is the major interest rate tool being used to support the rupee.

The central bank jacked it up by 200 basis points in July to 10.25 per cent so that it stood 300 basis points above the official policy repo rate, aiming to tighten market liquidity and make it more expensive to speculate against the rupee.

Still, A. Prasanna, economist at ICICI Securities Primary Dealership Ltd in Mumbai, said it was a 50/50 call as to whether Rajan cuts the MSF to 9.25 per cent.

Several economists expect Dr Rajan to reverse some of the other rupee-supporting steps. He might relax a requirement that banks meet 99 per cent of their cash reserve ratio on a daily basis. The minimum was increased from 70 per cent previously, which drained liquidity from money markets but also choked off credit.

"Out-of-the-box solutions"

India Inc. is looking forward to some unconventional measures from Dr Rajan.

"We expect the new RBI governor to initiate measures that would enthuse the market participants, boost investor sentiment and bring confidence back in the economy," said Sidharth Birla, senior vice president of industry body Ficci.

Better communications:

In his first-day press conference, Dr Rajan spoke of the need for communication and a "clear framework" as to where the central bank is headed.

"We need a more comprehensive policy statement from the RBI underlining the outlook on inflation and guidance around the future of monetary policy framework, especially with regards to inflation targeting," said Gaurav Kapur, senior economist at Royal Bank of Scotland.

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Agencies
July 11,2020

New Delhi, Jul 11: A notice which claims that a COVID-19 Monitoring Committee has been formed is fake, and no such committee has been set up by the Union Home Ministry, as per Spokesperson, Ministry of Home Affairs (MHA).

The "Fake" MHA order stated, "Pursuant to the official orders received dated: Monday, May 18, 2020, of the Honourable Minister of Home Affairs, passed in the approval of Special Status Advisory Committee for COVID-19, a COVID-19 Monitoring Committee has been constituted in the MHA vide order dated: Friday, June 12, 2020."

MHA Spokesperson also cautioned people to beware of fake news and rumours.

India's COVID-19 case count crossed the eight lakh-mark on Saturday with yet another highest single-day spike of 27,114 new cases in the last 24 hours.

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News Network
March 18,2020

New Delhi, Mar 18: As many as 276 Indians have been infected with coronavirus abroad, including 255 in Iran, 12 in UAE and five in Italy, the government informed the Lok Sabha on Wednesday.

In a written reply to a question in the Lok Sabha, Minister of State for External Affairs V Muraleedharan said the total number of Indians infected by coronavirus is 276 — 255 in Iran, 12 in UAE, five in Italy, and one each in Hong Kong, Kuwait, Rwanda and Sri Lanka.

A fourth batch of 53 Indians returned to India from Iran on Monday, taking the total number of people evacuated from the coronavirus-hit country to 389.

Iran is one of the worst-affected countries by the coronavirus outbreak and the government has been working to bring back Indians stranded there. Over 700 people have died from the disease in Iran and nearly 14,000 cases detected.

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News Network
March 2,2020

Mar 2: Two more positive cases of the novel coronavirus -- one in Delhi and another in Telangana -were reported, the Union Health Ministry said on Monday.

The person from Delhi had travelled to Italy, it said adding he is being diagnosed at RML hospital.

The other person with the coronavirus infection has a travel history to Dubai, the ministry added.

"Both the patients are stable and being closely monitored," the ministry said.

Sunitha Krishnan is the name of the patient from Telangana and she is a social activist.

Krishnan has tweeted, "So going to enjoy hospitality at Gandhi Hospital for two days as admitted in the isolation ward suspected coronavirus. They have not started the tests yet( 1.30 hrs since I arrived).I believe the results make take 48hrs. At this pace, I have a feeling I am might be here sometime."

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