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India Central Bank Spat Latest Flashpoint as Easy Money Era Ends

  • Government is treading dangerously on RBI autonomy: analyst
  • Modi faces reelection next year, wants to boost growth
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India is the latest country to see age-old tensions between governments and central banks flare up as the era of easy money draws to a close.

Prime Minister Narendra Modi’s government sent the central bank letters that cited a never-used power to overrule the Reserve Bank of India in a bid to push through measures that would unleash spending ahead of an election, Bloomberg reported Wednesday. That triggered a feisty speech from a central bank deputy in defense of independence, which brought the spat into the open.