‘Curbing RBI freedom is credit negative’

Ratings agency Moody’s Investors Service reacted to the resignation of Reserve Bank of India Governor Urjit Patel, saying that any government attempt to curtail the central bank’s independence will be credit negative.

“That said, our assessment of institutional strength ultimately focuses on the quality and policy outcomes of the institutions themselves, not on the individuals leading them. We currently assume that the RBI will continue to pursue price and financial stability and implement policies towards these goals,” it added. The ratings agency said independence of central bank is an important consideration of its assessment of a country’s institutional strength.

Motivation unclear

“While the motivation for the RBI Governor’s resignation is unclear, the independence of a country’s central bank is an important consideration in our assessment of a sovereign's institutional strength,” it said.

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Printable version | Jul 2, 2022 3:42:45 am |