RBI governor Raghuram Rajan is expected to keep interest rates intact in his first monetary policy announcement today after taking over from Duvvuri Subbarao but scale back some of the liquidity tightening measures taken by his predecessor to stem the fall of rupee. All eyes are on Rajan's first monetary policy announcement as the RBI governor today.
Mr. Rajan had taken over the position of RBI governor on 4 September 2013. Market sentiments have improved significantly after the Fed announcement and expectations are high that RBI will take measures to ensure the smoother flow of liquidity to make money supply available for productive purposes.
Mr. Rajan while speaking to media, said “Our task today is to build a bridge to the future over the stormy waves produced by the global financial markets. With every confidence we will succeed in doing that.” RBI is not expected to lower the short term repo rate at which banks borrow the funds from it, as growth inflation dynamics still remains weak, reported nnis.
The new governor will announce the monetary policy today and everyone is waiting eagerly for the announcement with high expectations. Indranil Sengupta, the chief economist in India, working with Bank of America Merrill Lynch said, “We expect governor Raghuram Rajan to partially roll back July tightening measures after the US Fed expectedly deferred tapering. Our US economist, Ethan Harris, continues to expect the Fed to taper December onwards. The reprieve for rupee should provide the RBI space to support growth,” reported TOI.