Raghuram Rajan only central banker I trust, he should get Nobel in Economics: Marc Faber

[Rowdy]

At a time when reports of differences between the government and the RBI pop up frequently, governor Raghuram Rajan has received a ringing endorsement of his capabilities as a central banker from Marc Faber, the editor & publisher of the The Gloom, Boom & Doom Report.

In an interview to ET Now, Faber said he did not trust central bankers except that of India's, since he has a solid grip on monetary policies, while the other monetary authorities around the world were basically money printers.

"Mr Raghuram Rajan is an outstanding man who understands central banking. He is probably only one in the world among the crowds of professors at central banks that actually has a good grip on monetary policies and what you can or cannot achieve with them. He should get the Noble Prize in economics but the others are all money printers at heart, all of them," Faber said.

Debate has been raging over the RBI governor's veto power on rate-setting and the government nominating a majority four of the seven-member monetary policy committe, since the revised Indian Financial Code draft released last week appeared to recommend the latter. The government has since said this was only a proposal and that it wasn't seeking to clip the governor's wings.

On August 5, when the RBI left the key repo rate unchanged at 7.25%, Raghuram Rajan squelched speculation about a rift with the finance ministry, suggesting that his veto over interest rates was an issue for legitimate debate. In a forceful intervention, Rajan said committees were less prone to making mistakes than personalities and would hold up better against pressure. He added that continuity was another critical element when it came to monetary policy.

"The difficulty in the current system is it personalises the policy," Rajan said. "Policy is dependent on one person, which means you can make mistakes. Committees would be less prone to mistakes because there is a discussion among people of different hues. Committees are less susceptible to pressure, both internal as well as external pressure. It is harder to push a committee. But I think what is also important is continuity."
http://economictimes.indiatimes.com...economics-marc-faber/articleshow/48452882.cms
My view
Having seen the greece crisis up Close and a few contacts I know....... I think Raghuram is handling the Economy like a pro. He will be pressured to reduce rates and flush the economy with cheap money ... He must resist the temptation... the Govt. (Jai-Italy) will push him .....
@Mad Indian @Sakal Gharelu Ustad @OneGripPilgrim @blueblood etc.

 

[Simple_Guy]

After the Yuan devaluation it will be interesting to see what Rajan does in the next RBI policy meet in September 29.

Rajan will probably stay out of any currency war

Rajan has voiced criticism of nations using exchange-rate depreciation to boost their economies and said this month it’s better to let the rupee “find its level” with the central bank stepping in only to curb volatility. Rajan won the trust of global funds by boosting the rupee from a record low in August 2013 and waging a war against price increases. He’s resisted pressure from the finance ministry in keeping borrowing costs among the highest in Asia.

The 53% plunge in Brent crude in the past year helped narrow the current-account deficit to a seven-year low in the year ended March and is one reason why the rupee’s drop against the dollar hasn’t raised alarm bells for policy makers.

Even as India runs a $42 billion trade deficit with China and a weaker yuan would only make Chinese goods cheaper, Rajan may favour measures to boost productivity and reduce dependence on imports, according to Kotak Securities Ltd.

 

[Illusive]

This is what should happen, top IIT students working in India, wonder where the rupee would be if not for him.

 

[Rowdy]

This is what should happen, top IIT students working in India, wonder where the rupee would be if not for him.

The best thing he is doing is keeping the money tight....... It's absolute madness outside India.

 

[Rowdy]

Inflation falls to historic low of -4.05 pc


In what should cheer markets and raise hopes of a possible rate cut by the Reserve Bank of India, wholesale price inflation (WPI) fell to a historic low of -4.05 per cent in July, compared to -2.4 per cent in June.

This marks the ninth straight month of contraction in wholesale prices, and follows consumer price index (CPI) inflation slowing to 3.8 per cent in July from 5.4 per cent in June. The contraction in WPI can be attributed largely to falling food and commodity prices.

“The sustained decline in WPI is good news for corporates as WPI measures input prices for the manufacturing process. Although retail inflation has also fallen, the gap between CPI and WPI has increased. This, along with a 30 basis point median decline in the base rate augurs well for corporate sector profitability, which is likely to reflect in the balance sheets from the next quarter,” said Dr Devendra Kumar Pant, Chief Economist, India Ratings & Research.
[...]
“Food inflation numbers are also moderating. Even though we are having mixed signals with regard to the progress of monsoon, given government’s adequate preparedness on this front, we should be able to keep food prices under check,” said Dr Jyotsna Suri, President, FICCI.
RBI Governor Raghuram Rajan had said, following the monetary policy announcement on August 4, that the central bank may consider a rate cut outside of the policy cycle if the situation demands it.

“We are waiting for information. There was more need to move fast in the early stages of the turnaround. We will take all information into account and decide whether at times it warrants moving in between policy cycle or it does not," he had said at the time.
DONT DO IT RAJAN SAHAB.... DONT CUT RATES PLEASE.
http://www.thehindu.com/business/wholesale-price-inflation-falls-to-historic-low-of-40pc/article7540272.ece?homepage=true

 

[Sakal Gharelu Ustad]

Causality between monetary policy and high food prices in India is a big myth. Indian agriculture is a supply driven sector and is mostly controlled by govt. Most price increases were related to steep increases in MSP and excess MNREGA funds in rural economy. Modi having addressed both these issues, RBI should not be given too much credit for it.

 

[raja696]

I believe raghuram is playing in the hands of world bank... yup i agree he is very professional . Still there is lot of hidden mud on his hands in laying regulations.

 

[pmaitra]

In a forceful intervention, Rajan said committees were less prone to making mistakes than personalities and would hold up better against pressure.

This is the fundamental message of the article and a very valid one.

My view
Having seen the greece crisis up Close and a few contacts I know....... I think Raghuram is handling the Economy like a pro. He will be pressured to reduce rates and flush the economy with cheap money ... He must resist the temptation... the Govt. (Jai-Italy) will push him .....

From what I have seen so far, yes, I agree.

Rajan has voiced criticism of nations using exchange-rate depreciation to boost their economies and said this month it’s better to let the rupee “find its level” with the central bank stepping in only to curb volatility. Rajan won the trust of global funds by boosting the rupee from a record low in August 2013 and waging a war against price increases.

This is also the central theme of this article, and I think Mr. Rajan deserves credit for doing this. We cannot indefinitely keep devaluing the Rupee. At some point, we have to stop.

This is what should happen, top IIT students working in India, wonder where the rupee would be if not for him.

If top IIT students get into the top management positions of export oriented industries, they will do just the opposite, lobby the government to devalue the Rupee, and wreck havoc on the economy, while their firms will benefit.

The best thing he is doing is keeping the money tight....... It's absolute madness outside India.

Absolutely. Keep money tight, and keep economics graduates from Harvard-Yale clique and Amartya Sen as far as possible from economic decision making.

 

[Simple_Guy]

Raghuram Rajan after turmoil in global markets

"India is better placed compared to other countries with low current account deficit, and fiscal deficit discipline, moderate inflation, low short term foreign currency liabilities, very sizeable base of forex reserves," Rajan said. "We will have no hesitation in using our reserves when appropriate to reduce volatility in the rupee."

Rajan's comments come as the benchmark BSE index tumbled as much as 4.2 percent to its lowest since October 2014, while the rupee fell to as low as 66.52 per dollar, its weakest since September 2013.

 

[Rowdy]

Hohoho I was right..... Rajan sahab should now hold off on rate decrease even longer.....

 

[ezsasa]

Just now U.S. stocks tanked almost 1000 points before they came back up. Last time their stocks tanked 700 points we had 2008 meltdown.

Given the conditions US will hold back rate hike and india will hold back rate decrease.

Looks like volatility is the "Word of the week".

Sometimes I feel we should be thankful to congress for appointing Rajan.

 

[Rowdy]

Just now U.S. stocks tanked almost 1000 points before they came back up. Last time their stocks tanked 700 points we had 2008 meltdown.

Given the conditions US will hold back rate hike and india will hold back rate decrease.

Looks like volatility is the "Word of the week".

Sometimes I feel we should be thankful to congress for appointing Rajan.

Rajan saved our a$$e$. He didn't buckle under pressure and did not dilute rates.... Now he will obviously not do it as the market is at a low and liquidity will just prop bubbles.

 

[Rowdy]

Suddenly after today's(24 Aug 15) blood bath everyone is liking the OP.
Talk about foresight.

 

[blueblood]

Raghuram Rajan only central banker I trust

He earned this trust fair and square.

Rajan predicted 2008 crisis, but we didn’t listen, rues IMF chief

http://www.thehindubusinessline.com...crisis-a-mistake-imf-chief/article7007386.ece

 

[Simple_Guy]

Why India urgently need a 50 basis points rate cut

the fact that he correctly predicted the great financial crisis leads many to believe that he can see potential danger signals to the economy which apparently others cannot. Not only has he misread our domestic inflation prospects, his perception of the on the ground reality is also absurd.

Firstly, Rajan has failed to understand the trend in global commodities, especially oil. Even if oil prices do not fall further, India is in a sweet spot. But where are we seeing the benefits of a commodity bear market in India? Nowhere yet.

The RBI's counterparts at the Fed are smart enough to realise that a strong labour market recovery is not sufficient for monetary tightening and are waiting to see an uptick in wage pressures and overall inflation. If only Rajan had been paying close attention to the movement of US 10 year bond yields, he would have easily concluded that the Fed was never intending to move as fast as he was expecting.

India desperately needs to see a large and a sharp fall in cost of capital. The transmission effect with the petty rate cuts so far has not worked as there is hardly any confidence within our financial sector of a sustained cyclical recovery in the investment cycle. Telling real estate developers that property prices must fall is not something he should be concerned about at this moment.

He should rather aggressively cut interest rates so that home loans become cheaper and the housing market will find its equilibrium as they do in any free market. Similarly, it is not his job to be commenting on how there should be globally coordinated exit strategy from quantitative easing. Monetary divergence is the global macro theme right now.

 

[blueblood]

@Simple_Guy , you need to watch "Inside Job" before trusting such articles from a nobody and understand the pov of Mr. Rajan.

 

[jackprince]

@Simple_Guy , you need to watch "Inside Job" before trusting such articles from a nobody and understand the pov of Mr. Rajan.

True. A must watch for everybody. Described the coterie in very simple terms. Even I understood!!!!

 

[blueblood]

True. A must watch for everybody. Described the coterie in very simple terms. Even I understood!!!!

The sheer amount of greed and shamelessness displayed by the Wall St., easily manipulated toothless regulators and the stupidity of political establishment is mind blowing.

From politicizing and monetizing of economics education system to the refusal to reform is going to bring another recession in the US and the world.

Truly a must watch!!

 

[Simple_Guy]

Errr....I'm not interested in movies. Posting an article does not mean automatic subscription to those views.

 

[Simple_Guy]

China cut a test for Rajan nerve

Raghuram Rajan is expected to come under intense pressure to trim interest rates after China's central bank today cut its one-year benchmark bank lending rate by quarter of a percentage point to 4.6 per cent.

China has now slashed its benchmark rate five times in nine months....In contrast, the RBI has cut its key interest rate thrice during the same period.

The RBI today revealed that four of the seven members of the technical advisory committee that Rajan consulted before his August 4 decision to hold interest rates had urged him to cut the benchmark rate.

Economists, however, widely felt that the RBI would watch the progress of the monsoon and its impact on inflation. It may also choose to wait and see whether the US Federal Reserve raises interest rates in September. The RBI is scheduled to review the monetary policy on September 29.