Millennium Post

Tuesdays remain preferred day for policy reviews this fiscal

It may be sheer coincidence that all monetary policy reviews by RBI Governor Raghuram Govind Rajan this fiscal have taken place on Tuesdays and this would be the case for the upcoming review this week as well.

In the current fiscal beginning 1 April, 2014, Rajan has undertaken four monetary policy reviews so far and the fifth would take place on 2 December, with all these five being on Tuesdays. The former chief economist of IMF, who took over as RBI Governor on 4 September, 2013, came out with four policy reviews during the previous fiscal as well and two of them took place again on Tuesdays. The other two reviews by Rajan were on Wednesday and Friday last fiscal. As a result, six out of eight monetary policies announced by him during his entire tenure so far have been on Tuesdays. The ninth review, scheduled for this week, takes place on a Tuesday where RBI is widely expected to keep the benchmark rate unchanged.

Incidentally, Rajan has maintained the benchmark interest rate in all four reviews so far in the current fiscal citing high inflation, even as there has been a growing clamour for rate cuts by industry, the government and economists among others. Surprising the industry and analysts completely, the RBI Governor in his first policy review in September last year raised the short-term policy (repo) rate by 0.25 per cent to 7.5 per cent to keep ‘worrisome’ inflation under check.
His fight against stubborn inflation gained pace the following month as well when he again hiked the repo rate by a quarter of a percentage point to 7.75 per cent. Rajan put a pause on rate hike on 18 December, 2013 but said the RBI will hike interest rates if inflation does not subside in line with the expected declining trend.

Not happy with the inflation trend, RBI did hike repo rate by 0.25 per cent the very next month that is in 29 January, 2014 by 0.25 per cent to 8 per cent. 

Since then, the central bank has left its benchamark rate unchanged despite pressure from all quarters.
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