Urjit Patel resignation: An alarming challenge to the RBI2 min read 11 Dec 2018, 07:37 AM IST
When governments are in charge of monetary policy, they're tempted to take chances with inflation to spur short-term growth. An independent central bank can more readily gain investors' trust that inflation will be kept under control
Government is conducting a dangerous experiment in economic management. This week, following renewed pressure to conform to the government’s thinking, the head of the Reserve Bank of India, Urjit Patel, resigned, citing “personal reasons." Prime Minister Narendra Modi’s officials have challenged the RBI’s operational independence before, but their latest effort marks a significant escalation. It’s a pattern seen elsewhere as well — witness U.S. President Donald Trump’s frequent attacks on the policies of the Federal Reserve. Too many governments seem to be forgetting why central banks need to be independent.
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