Monetary policy transmission encompasses the whole continuum of interest rates; of course, the central bank only determines the overnight policy rate. Urjit Patel More Quotes by Urjit Patel More Quotes From Urjit Patel An owl is traditionally a symbol of wisdom, so we are neither doves nor hawks but owls, and we are vigilant when others are resting. Urjit Patel resting others wisdom owl Enhanced transparency has helped to reinforce the stability of India's financial system. Urjit Patel system transparency financial india If very fundamental reforms take place, especially when it comes to factors of production like land, labour, then a higher growth rate is possible. Urjit Patel possible place like growth I think it is important that we should be on the side of keeping borders open with respect to trade and movement of factors of production. Urjit Patel think respect trade important The monetary policy committee could either keep rates constant, increase them, or bring them down. There are three options possible compared to when it is accommodative. Urjit Patel possible down policy three The best way that a central bank can support growth on a durable basis is to ensure inflation is low, stable - there is financial stability - and that is the role that the central bank plays. Urjit Patel best support growth way From the RBI side, the fake Indian currency note is an important issue that needed to be addressed. The other collateral benefits from this, in terms of greater accountability, better public finance, more transparency, are, by definition, areas that take time to fully play out. Urjit Patel better finance fake time I think India's policy that the openness of trade should be carried through a multilateral process is the right one. Urjit Patel right think india process The lack of a consistent policy from major economies is the main source of volatility. Urjit Patel lack policy consistent source A well-functioning transmission should at some point go from the overnight right up to 40 years, and that is the ultimate objective in having monetary transmission that affects the whole gamut of borrowing tenure. Urjit Patel right some go years We should redefine the metric for effective lending, viz., prioritise loans to enterprises, which will generate more employment. Urjit Patel which more will employment Government should eschew suasion and directives to banks on interest rates that run counter to monetary policy actions. Urjit Patel actions run policy government Yes, 4% is the government-mandated target to the MPC. The plus/minus 2 percentage-point upper and lower bands are the tolerance levels specified by the government. If we breach those for three consecutive quarters, we need to inform the government of why that happened and what we propose to do to bring inflation within the two bands. Urjit Patel need tolerance three government The two important variables for the policy formulation are projected inflation and the output gap. There is no clear hidebound mathematics that we must give 'X' weight to inflation and 'Y' weight to growth and form the associated policy. Urjit Patel mathematics growth important two Growth is always there in the MPC's scheme of things; we don't lose sight of that, but not at the cost of inflation. Urjit Patel lose things always growth There will always be divergence of views on the output gap, as it is unobservable in a rigorous direct sense. There are only estimates. How can there be a strong consensus on that? Urjit Patel will how always strong What is important is that in a capital-scarce country like India, the real interest rate needs to be positive enough to encourage healthy growth of financial savings; we get into macro difficulties when real rates on financial savings become negative for a length of time. Urjit Patel growth time positive negative I think that is a very important milestone in our economic history that the monetary policy is now determined through a committee process where there are both independent committee members and representation from the RBI. Urjit Patel think important process history We have been mandated by the government, backed by legislation, that we have to have an inflation target of about 4%. Urjit Patel about inflation target government I think that it is important that one grows a thick skin fast in this business, and I think we have done that. Urjit Patel skin think important business
