New Indian central bank chief Raghuram Rajan makes his first monetary policy statement on Friday with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.
But in a reflection of the policy challenges faced by the former IMF chief economist who has been dubbed “The Guv” by the Indian media, Rajan is likely to strike a hawkish tone on inflation.
With price pressures rising but economic growth running at a decade low, Rajan must find a fine balance in central bank policies to support economic activity without adding fuel to inflation and giving investors fresh reason to sell the currency.
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