Bilkulonline.com, New Delhi, Aug 22: Welcoming the appointment of RBI Deputy Governor Urjit R. Patel as the next Governor of the central bank, the government on Monday said that he should be able to contain inflation within the target of 4 per cent, plus or minus two percentage points.
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The rupee closed at Rs 67.31 to the dollar, about 13 paise higher than the close on Friday. The forex markets did not react to the change of guard at the central bank.
Once formed, the 6-member MPC will decide on interest rates based on the inflation target under the monetary policy framework agreement. “But today’s market movements were non-events as the yields and moved in both directions by an equal measure even last week”.
“He (Patel) will hopefully control inflation as he has experience with monetary policy”, Minister of State for Finance Arjun Ram Meghwal told reporters here.
Patel, now deputy governor at RBI, will take over the top job at the central bank when incumbent Raghuram Rajan demits office on September 4 after completing his term.
RBI’s next monetary policy review is scheduled on October 4. The US dollar was firm against global currencies in overseas markets on rising prospects for a rate hike by US Federal Bank, which hit the rupee sentiment. “By appointing Urjit Patel, the government has selected a candidate who can fit into the large shoes of Raghuram Rajan”.
Others had doubts whether the new governor will do anything to go against the government line and may even be a bit dovish so that the pro-growth agenda of the government can be met.
Noting that the job of the RBI Governor is not confined to the monetary policy, Das said that as the regulator of banks and non-banking financial companies, he also has to ensure smooth functioning of the entire financial sector, including flow of credit.
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The three government nominees will be short-listed by the search-cum-selection committee headed by the cabinet secretary. The other three members are RBI governor, deputy governor in-charge of monetary policy and an RBI executive director.
