Moneycontrol
Feb 17, 2017 02:46 PM IST | Source: Moneycontrol.com

Low-profile Guv Urjit Patel has ticked right boxes on policy

Like his predecessor Raghuram Rajan, incumbent governor Urjit Patel has developed a knack for catching the market by surprise


Moneycontrol Bureau

Two weeks ago, the Reserve Bank of India (RBI) surprised many when it left key rates untouched even most analysts expected it to cut rates.

Like his predecessor Raghuram Rajan, incumbent governor Urjit Patel has developed a knack for catching the market by surprise -- the skill was on display the most when the historic decision to phase out high-value currency notes was announced on the eve of November 8.

(While it is perceived that the government took the decision, protocol dictates that such decisions are taken by the central bank. Accordingly, the decision to demonetise Rs 500 and Rs 1,000 was taken by the RBI on the 'advice' of the government.)

Demonetisation led people to question Patel’s autonomy and muscle as the Reserve Bank chief. His reluctance to communicate proactively led people to believe he was kept out of the affair.

But the governor told Network18 Group Editor in Chief Rahul Joshi that the office requires him to develop a 'thick skin', and that we welcome constructive criticism.


Patel contrasts with his predecessor, Raghuram Rajan, who spoke out clearly, well and often, sometimes on issues seen as beyond his remit. Patel is quiet while Rajan was outspoken.

Be that as it may, he has done well on the issues that should matter the most to a central bank chief: the rupee has been stable, inflation is under control while the monetary policy decision-making process has got an upgrade the monetary policy committee.

Patel, who holds a PhD from Yale University, has worked at the International Monetary Fund (IMF), The Brookings Institution at Washington and the Massachusetts-based Boston Consulting Group. He became deputy governor in January 2013.

The Kenyan-born had once described the central bank's role in the economy as being "neither a hawk nor a dove, but an owl" when it comes to taking monetary policy decisions.

"The owl is traditionally a symbol of wisdom. We are vigilant when others are resting," he said while brushing off the hawk and dove characterisations that are used to describe central banks that maintain very tight or loose monetary policies, respectively.

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