Published On: Tue, Mar 17th, 2020

‘RBI’s Moves Not in Coordination with Any Global Central Bank’

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India’s central bank, RBI called for a press conference on Monday and people were expecting RBI Governor Shaktikanta Das to cut the interest rates as an emergency act after the U.S. Federal Reserve announced that they are cutting their benchmark interest rate to nil.

It was clarified by the Citi Economists that the Reserve Bank of India’s decision towards their monetary policy has no relation to any other central bank in the world and their actions are not in any way coordinated.

“It is quite apparent that the RBI’s policy decision is not part of any globally coordinated central bank action,” Citi economists Samiran Chakraborty and Baqar M Zaidi wrote in a Monday note, following the press conference. “Central bankers are trying to counter two channels of transmission of the shock – financial stability risk arising from large market dislocations and growth risk from (an) estimated disruption in economic activity.”

The expectations were created as after the US Feds move, various central banks around the world including those in Australia and England also cut out their interest rates in order to deal with the economic impact due to the coronavirus.

Bank of Korea also slashed the interest rates by 50 basis points at an emergency meeting. Acknowledging the expectations Das said that any rate cut will be needed to carefully considered by the Monetary policy committee and they are the one who will declare any rate cuts in the meeting to be held in April.

 

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