A Simple Logical Question Gets An Idiotic Answer!

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Anirrudh Keni, Jankidevi High School: Recently you increased repo rate by 25 basis points and I was wondering if you increase interest rates on loans by 0.25% , what are you trying to achieve?

Raghuram Rajan: Since you used jargon, let me explain to those who may not understand - repo rate is the interest rates we set. The higher we move the interest rate; it is as if the less money we print. Not quite the same but think of it the same way. It works in two ways. By keeping the cost of money high, the repo rate has an effect by setting expectations. A lot of what central banks do is managing expectations. If I tell you, I am intent on keeping inflation contained and I will do what it takes, eventually people start to believe it. And as people start to believe it, when they determine prices for what they are selling -goods or labour - they take that into account and moderate their price increase. Initially, we will have more impact on expectation and then later on prices.

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Now I know why no one can figure out what is happening in that country. People in-charge of formulating and implementing the policy themselves have no fucking clue about what they are doing!

• Not quite the same but think of it the same way - (??!?).
• A lot of what central banks do is managing expectations - No you fuck… you are supposed to manage the circulation of money and regulate banking.
• If I tell you, I am intent on keeping inflation contained and I will do what it takes, eventually people start to believe it - I know people are stupid… par itne bhi nahin… tum kaho aur hum maan lenge.. bas kya! Are you trying to govern the monetary policy of the country based on just your statements and your BELIEF that people will BELIEVE you? Governor ho, Sai Baba nahin ke kuchch bhi bologe tou log maan lenge.
• And as people start to believe it, when they determine prices for what they are selling -goods or labour - they take that into account and moderate their price increase - Which fucking world are you living in?!
• Initially, we will have more impact on expectation and then later on prices - Why don't you first try to get some sense in that idiotic head of yours. Decide what is it that you want to do. Don't just practice Shock and Awe. All you have been successful in doing is SHOCK. Still waiting for the Awe.