Raghuram Rajan says rate hike in public interest

Jan 29 2014, 21:42 IST
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Broad point is that don't try and put us into buckets. We are doing what is necessary, says Raghuram Rajan. Reuters Broad point is that don't try and put us into buckets. We are doing what is necessary, says Raghuram Rajan. Reuters
SummaryBroad point is that don't try and put us into buckets. We are doing what is necessary, says Raghuram Rajan.

A day after he surprised the markets with a 0.25 per cent hike in key rates, Reserve Bank Governor Raghuram Rajan today defended the move citing public interest and took a dig at analysts and economists for labelling him a hawkish monetarist.

"We can't talk only to analysts who are steeped in inflation targeting and speak their language. We also have a broader audience that we have to take along," he said at the customary post-policy analysts concall today when asked about the dissonance in the December statement and the current rate hikes.

However, he was quick to add that RBI is not blind to the issues arising from low growth saying the Central bank is concerned about growth as well.

He further said, "We have to operate in such a way that people understand that inflation is the important target but at the same time inflation control is in the wider interest of the population".

On analysts terming the move as dovish or hawkish, Rajan said, "On hawk with dove or dove with hawk....the whole point is that we are trying to craft a path in an environment where economy is relatively weak and we have to be careful that the broader people--I am not talking about the analysts-- understand what we are trying to do".

Yesterday, to answer questions from reporters, he took to ornithology to explain the policy stance saying, "we are neither hawks, nor doves. We are actually owls."

He was answering a question on the contradiction in the RBI's third quarter monetary policy, which is hawkish in its stance as it unexpectedly raised rates, but dovish in its guidance because of indications of a pause.

"An owl is traditionally a symbol of wisdom. So we are neither doves (nor hawks)...but owls and we are vigilant when others are resting," deputy governor Urjit Patel had said.

"The broad point is that don't try and put us into buckets. We are doing what is necessary for the economy," Rajan had said.

Explaining the rationale behind the hike, Rajan said, "We are in an environment where we have got high inflation with low growth.

"So navigating in these circumstances has to be done with more care than in a situation where you have got high inflation and high growth and you know what needs to be done and there is complete consensus on that."

Seeking support from politicians,

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