Acharya's exit to bring in more rate cuts?

The exit of RBI’s Deputy Governor Dr. Viral Acharya is not surprising. Though it was a rumor, but market had anticipated it after the resignation of former Governor Dr. Urjit Patel  in December 2018, just one day before the state elections result was suppose to be announced. Dr. Acharya was appointed as the RBI Dy. Governor on January 23, 2017 for a 3-year term. However, citing unavoidable personal circumstances, he has decided to leave RBI on 23rd July 2019, 6 months before his term ends.

He was the youngest to become a Deputy Governor at RBI. He has been a strong advocate of conservatism while dealing with monetary policy and financial markets. He had earlier raised concern over the importance of RBI's independence in October 2018 citing many instances where financial markets have bear the brunt of MPC and government colliding. However, his comparison of India with Argentia, (latter of which has defaulted multiple times against none for India) did not go down well

Dr Acharya has been part of the past 15 MPC meetings. He and the other external MPC members have been on the same page on majority of occasions. However, there is more diversion in his recent decisions against other voting members in MPC, particularly visible in the recent monetary policy decisions. In past year, he voted twice for rate cut and twice for rate hike. He was the hawk in a dovish MPC. We believe that the next MPC meeting in August will have more dovish stance going forward and hence, more rate cuts are entirely possible.

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