Subbarao, Chidambaram meet 2nd time in a month

Reserve Bank governor D Subbarao met finance minister P Chidambaram on Friday to discuss the macro-economic situation.

This is the second such meeting between the two this month, indicating that the finance ministry and RBI are working towards better coordination on monetary policy and other regulatory decisions.

"I met the finance minister and reviewed the macro-economic situation," Subbarao told reporters. He, however, refused to elaborate. The central bank has consistently maintained a hawkish stance on inflation, which has been high for nearly three years (inflation fell to a 32-month low of 6.87% in July). Chidambaram recently hinted at high interest rates impacting growth and said that "carefully calibrated risks" might be taken to spur growth, in an apparent reference to monetary policy.

The country's economic growth last fiscal slipped to a 9-year low of 6.5% and according to many analysts, the prospects for 2012-13 do not look any better. Inflation measured by the Wholesale Price Index is much above RBI's 5-6% comfort level. RBI has also expressed concerns on high core inflation and the ongoing drought conditions.

In its monetary policy review last month, RBI had left key policy rate unchanged at 8%. RBI is scheduled to review its monetary policy on September 17. Chidambaram will hold first meeting over regulatory issues with public sector banks on August 18.

Chakrabarty reappointed

The government has re-appointed KC Chakrabarty as deputy governor of RBI, for a period up to June 30, 2014, a release from RBI said. In June, Chakrabarty, whose tenure was to end then had gotten a three-month extention up to September 14.

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