Central Banks
India Rate Hawk Sees RBI Credibility Restored After Hikes
- Stable price expectations, bond yields show trust in RBI
- Hikes should be front loaded and not spread out in tiny doses
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A hawkish member of India’s rate setting panel who warned months ago that the central bank’s credibility was at risk now sees stabilizing bond yields as a signal that trust had been restored after a series of rate hikes.
“I draw comfort from the fact that during the recent spike in inflation, survey data indicated that inflation expectation remain well anchored and long term yields were quite stable,” Jayanth Rama Varma, an external member of the monetary policy committee, said when asked about central bank’s credibility. He responded in an e-mail reply to questions on Saturday.