India appointed career civil servant Sanjay Malhotra as its new central bank governor yesterday in a surprise move that leaves markets guessing about the future direction of monetary policy.
Financial markets had expected current governor Shaktikanta Das to be handed a second extension when his term ends today.
Malhotra, currently revenue secretary to the finance ministry, has worked in financial services, power, taxation and information technology over a three-decade career.
His appointment as Reserve Bank of India governor for a three-year term follows a decline in the country’s economic growth and an upturn in inflation.
“Not only are we dealing with a sharp growth-inflation trade off and a changing global environment but also a new set of monetary policymakers at the helm,” said Madhavi Arora, chief economist at Emkay Global.
“A change in the governor followed by a likely change in the deputy governor in-charge of monetary policy before the February monetary policy review will mean a significant amount of uncertainty for the markets,” she added.
RBI Deputy Governor Michael Patra’s term is also set to conclude in mid-January and the government is looking for a replacement.
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