Letters: A balancing act

This refers to the editorial "A surprise pause" (December 19). Though Reserve Bank of India (RBI) Governor Raghuram Rajan's decision to keep key policy rates on hold has been widely hailed by the industry, certain quarters however feel the apex bank has softened its stance on inflation and Rajan is perhaps losing his credibility in arresting inflation. Sometimes, no decision also amounts to a good decision. Remember, the market was almost prepared for a rate hike of 25 basis points. By maintaining status quo on key policy rates, the RBI has not only surprised the market, but is also trying to indicate it would want the things to settle down before taking a call at an opportune time.

The message from Mint Road is also clear that the RBI would not hesitate to take a call when the situation warrants and not wait for a monetary policy review. The RBI governor has, in a way, again infused a sense of confidence to improve market sentiments which is critical to get back to the high growth mode. Overall, it is a deft balancing act.

Srinivasan Umashankar, Nagpur

Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201 · E-mail: letters@bsmail.in
All letters must have a postal address and telephone number