We all praised RGR for raising Repo rates even though eventually he reduced short term rates in the form of MSF rate reduction last month. He got the benefit of doubt last week. We thought that by signalling Repo rate as primary tool, there may be more repo rate hikes in the offing.
The hawkish tone in the last policy print is commendable. But now things are not that clear especially with the last night MSF rate reduction, he has made reduced the short term rates up to 1.25% which is huge. The lazy Indian bankers will hail this and they will get confident that they can milk RBI further. This is not correct as far as fixing the economy is concerned. Still we want to give benefit to doubt to RGR as he is our only last hope to fix the mess created by RBI under Indian government pressure.
Is he going to raise the Repo rates now? If he wants to that, why not he do that now?He played along with Chidambaram in extending consumer loans at concession rates which a RBI governor should never do. He would have instructed RBI Deputy Governor to go and talk against the idiotic move as he cannot do that :). He may justify that in Indian system that is all we can do. But still??
But he also should know that a lot is expected out of him and he should not wilt under any pressure and he should not walk in the same trap / route in which Subbarao walked/trapped.
Now the onus is on RGR to prove himself as time is running out. The conspiracy theories such as 'RGR is brought into RBI only to buy time and save the corrupt congress govt' will gain momentum unless he acts otherwise to save the sinking ship.
The hawkish tone in the last policy print is commendable. But now things are not that clear especially with the last night MSF rate reduction, he has made reduced the short term rates up to 1.25% which is huge. The lazy Indian bankers will hail this and they will get confident that they can milk RBI further. This is not correct as far as fixing the economy is concerned. Still we want to give benefit to doubt to RGR as he is our only last hope to fix the mess created by RBI under Indian government pressure.
Is he going to raise the Repo rates now? If he wants to that, why not he do that now?He played along with Chidambaram in extending consumer loans at concession rates which a RBI governor should never do. He would have instructed RBI Deputy Governor to go and talk against the idiotic move as he cannot do that :). He may justify that in Indian system that is all we can do. But still??
But he also should know that a lot is expected out of him and he should not wilt under any pressure and he should not walk in the same trap / route in which Subbarao walked/trapped.
Now the onus is on RGR to prove himself as time is running out. The conspiracy theories such as 'RGR is brought into RBI only to buy time and save the corrupt congress govt' will gain momentum unless he acts otherwise to save the sinking ship.
As I predicted in your earlier post that RR will capitulate. Now he has come to the aid of "bad bankers". Now these bankers need not raise deposit rates and can borrow from MSF indefinitely. Winners: Corporates and political party supporters. Losers: Bank depositors already traumatized by inflation.
ReplyDeleteFully agree.Iam worried.
ReplyDeleteBut if speculated by Deepak, what if there comes a bad news?
totally lost faith in HIm ...i will wait for 9% to break on upside to have full blown DEpression. where the RBi cant do much .He has bent over to political class by doing fcnr and MSF rates and cheap loans ,I think we are setting stage for biggest mkt panic of our times.
ReplyDeletei am 99% sure US rates going to surge to 5%+ in a swift move... once that happen RBI will loose control of the bond mkt for sure.
ReplyDeleteHe is going to pay back everything in gold from Hindu temples. Such a simple solution to use the savings of thousands of years to pay off the the debt create by thieves in Delhi and Mumbai in our times.
ReplyDeleteHow come no one else could come up with such an elegant solution? We must all be idiots.
the thing is MMS is a disaster no one knows this.He is really nuts like greenspan and lagard and aluwalia and IMF world bank morons and krugman.PRINT and prosper .
ReplyDeleteThey dont care about the lives they will be killing.