The Hindu Business Line : ‘Questions’ on monetary policy

Chennai, Aug. 1On the sidelines of one more video-conferencing with the media, which has now become standard fare for the central banker, there is action.

Scribes seem to have earned some respite – with the communication link snapping owing to ‘technical reasons’. And they are collectively trying to decode the otherwise drab lines that litter the press release, hoping perhaps, to discover where credit and interest, liquidity and inflation are headed.

This, even as a few journalists, who believe in a life after policy, decide to ask one another possible ‘policy’ questions that they were always afraid to ask Y.V. Reddy, the Governor of Reserve Bank of India.

Interestingly, there are energetic responses.

Excerpts from the eavesdropping…

Why did you raise the CRR?

Liquidity conditions demanded it.

Now, is that good for me, as a common man?

The RBI always has the good of the common man at heart.

Will you be raising the interest rates too?

That’s a call for the banks to take.

What are you doing to control inflation?

Whatever we can.

Why is everybody talking about monetary policy?

You must ask them.

Is it possible to have real-time policy, on the SMS?

We are already moving in that direction.

Do you think the stock market was supportive of announcements from Mint Street?

We cannot comment on that.

How high do you expect the rupee to go?

We do not have any target in mind.

And on the forex reserves…

The full text of the policy is on the RBI site. You can read it.

When ‘global pressures’ hit our shores, do they get weakened or accentuated?

That depends on the strength of our shores!

Where do you see the ‘upward pressure on inflation’ coming from?

From both domestic and international factors.

And the ‘impulses of growth’?

Same as above.

You have said, “Increase in money supply warrants appropriate response.” What’s that going to be?

That will be revealed at the appropriate time.

One last question: How is central banking different from… wizardry?

Is it? Magicians and central bankers should never reveal the secret.

More Stories on : Interview | Credit Policy | Say Cheek

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‘Questions’ on monetary policy