Governor-designate and Officer on Special Duty at Reserve Bank of India, Raghuram Rajan, has started off in right earnest. On Tuesday, only his second day as OSD, Dr. Rajan is understood to have suggested that the central bank push back its mid-quarter policy review, scheduled for September 18, by a couple of days. The reason? The Federal Open Market Committee (FOMC) is meeting on September 17-18, and it is billed to be a critical event not just for India but for the global economy as a decision on tapering of stimulus is expected to be finalised.

Dr. Rajan apparently wants the RBI’s mid-quarter review to be rescheduled to September 20 so that the central bank can take stock of events arising from the FOMC meeting while framing its own policy, according to a top official. It is not known though if the incumbent Governor, Duvvuri Subbarao, has agreed to the suggestion.

There is nervousness in the markets over the possibility of U.S. Federal Reserve Chairman Ben Bernanke walking the talk and initiating the start of a tapering of stimulus. Mr. Bernanke’s term ends in January, and analysts feel that he would like to start off the tapering process to ward off inflation a few quarters down the line now that growth is beginning to rebound in the U.S. economy. It will be easier for his successor to continue the tapering process rather than initiate it when he’s new in the job.


An economist-manager at the helm of RBISeptember 16, 2013

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