New Indian central bank Governor welcomed by markets and business

NEW DELHI - The appointment of Urjit Patel as the next governor OF THE Reserve Bank of India will ensure policy continuity, ANZ Bank says in a research note.  Patel’s appointment has been welcomed by experts and the market alike.

“As far as monetary policy is concerned, the composition of the Monetary Policy Committee, which is expected to be unveiled in coming weeks, will take on more importance under the new regime,” ANZ says.

Patel, has been Deputy RBI Governor since January 2013), and will take over from Raghuram G Rajan on September 4.

ANZ says: “We think Patel’s appointment means a number of positives for the economy and the RBI’s policies in general, given that a) his credentials are solid, with prominent work experience in both the corporate and academic world, b) his experience within the RBI and close association with Governor Rajan in the past three years, and c) the Government’s move to appoint him is less political and will continue to maintain the RBI’s credibility among investors.

“More importantly, however, it was under Urjit Patel that the new monetary policy framework, recommended in January 2014, was set up.

“Its main recommendations were to adopt the CPI instead of WPI as the policy target and to have a formalised inflation-targetting mechanism in place. Most of these recommendations are already in place, with the final one of setting up a Monetary Policy Committee to be finalised in the next few weeks.

“Given his close association with these proposed changes, the market considers Patel a hawk, who with Governor Rajan championed the cause of reining in inflation. Many see his appointment as a sign of continuity for the RBI’s inflation- targeting framework.”  www.live.anz.com (ATI).