Hindi English Translation || Editorial || Limits to accommodation: on RBI's monetary policy

Limits to accommodation: on RBI's monetary policy

RBI’s failure to rein in inflation (मुद्रास्फीति) will hurt savers (a person who regularly saves money, especially by paying it into a bank account) and risk derailing (पटरी से उतरना, बाधा डालना, रोकना) a consumption-led revival (पुनः प्राप्ति, पुनर्जीवन)

The RBI’s latest monetary policy (मुद्रा नीति) statement and accompanying (जुड़ा हुआ, संबद्ध, जुड़ा) actions reflect (प्रतिबिंबित होना, इंगित करना, दिखाना) the dilemma (दुविधा, कठिनाई) confronting (सामना करना, परेशानी) monetary authorities (मौद्रिक प्राधिकरण, मुद्रा-प्राधिकारी). While the RBI’s Monetary Policy Committee voted unanimously (सर्वसम्मति से, विरोध के बिना) to keep benchmark (standard, base/basis, ideal) interest rates unchanged as part of its efforts to support growth as the economy recovers, one of the six members on the MPC demurred (विरोध, असहमति) yet again and voted against continuing with an accommodative (उदार, समझौतापरक) stance for ‘as long as necessary’. Prof. Jayanth Varma had at the last meeting in August flagged the risks that prolonged (lengthy, extended, protracted, continuing, unending, unrelenting) monetary accommodation (adjustment, adaptation, attunement) posed (constitute, present, create, cause (a problem or danger or risk)) to the inflation outlook (prospects, expectations, hopes, likely improvement, lookout, future) by ‘stimulating asset price inflation’ even as he posited (put forward, set forth, present, propose) that its impact in ‘mitigating (alleviate, reduce, diminish, lessen) the distress (difficulty, trouble, hardship) in the economy’ was arguably far more (a lot more, much more) marginal. The MPC’s own current inflation outlook is a mixed bag. The projection (estimation, forecast, prediction, calculation) for average inflation for the full fiscal year has been cut by 40 basis points to 5.3% even as the committee stresses (emphasize, underline, underscore, highlight, bring to the fore, accentuate) that with core inflation (it is a measure of the total inflation within an economy, excluding commodities such as food and energy prices (which change frequently)) ‘persisting at an elevated (higher/greater (than normal)) level’, the Centre and States would need to further ameliorate supply side and cost pressures, including through calibrated cuts in indirect taxes on petrol and diesel so as to address (tackle, deal with, attend to, try to sort out) the issue of ‘very high’ pump prices. In an acknowledgment (acceptance, admission, recognition, realization) of the difficulty it faces in containing price pressures even as it keeps interest rates at growth-supportive lows, the monetary panel reiterated its plea (appeal, petition.) for fiscal authorities to step in and help contain inflationary pressures, especially the pass-through impact of elevated transportation costs.

Governor Shaktikanta Das tacitly conceded that the time had come to wind down the pandemic (the worldwide spread of a new disease; The illness spreads around the world and typically affects a large number of people across a wide area)-era liquidity support as he announced the suspension (termination, debarment, eviction, elimination) of the G-SAP bond buying programme and simultaneously outlined (indicate, delineate, give a rough idea of, summarize) measures to drain out (empty (something) completely; use up, exhaust, deplete, consume, expend) surplus liquidity from the banking system. He cited the seemingly (apparently, evidently, outwardly) ‘strengthening’ growth impulses to justify the RBI’s decision. Here again, the MPC’s prognostication on growth is filled with uncertainties (unpredictability, unreliability, riskiness/precariousness) and caveats. Contact intensive (relating to the industries/sectors that have an average physical proximity index over 60. E.g. hospitality, travel, beauty and wellness, aviation etc. (Physical proximity index quantifies/measures the extent to which different occupations require physical proximity for work to be carried out)) services, which contribute about two-fifths to economic output and were among the worst hit by the COVID restrictions, still considerably (substantially, sizably, very much, a lot) lag their pre-pandemic levels; the manufacturing sector is still nowhere near supporting a rebound in investment demand (the demand by businesses for physical capital goods and services used to maintain or expand its operations); and, most crucially, the external environment that has so far (until now, up to the present, up to this point) been a major tailwind — through capital inflows and the demand for the country’s goods and services — is turning more uncertain (changeable, variable, irregular, unpredictable, unreliable, unsettled, unstable, fluctuating). With growing signs that some major advanced economies are gearing for an imminent (close/near, about to happen, approaching/impending) normalisation of monetary policy, the elbow room (scope, room to manoeuvre, leeway/margin, latitude) for the RBI to stay accommodative is narrowing (reduce, lessen, lower, decrease) sharply. As Prof. Varma had noted in his dissent, monetary authorities face the danger of failing to fulfil the MPC’s primary mandate (instruction, direction, order, requirement) of anchoring inflation expectations firmly around the 4% target. A failure that would hurt savers the most and risks derailing a consumption-led revival.

Courtesy: The Hindu

Important Word List With Meaning

1.monetary policy (noun)

Hindi Meaning - मुद्रा नीति
English Meaning - monetary policy refers to the use of monetary instruments under the control of the central bank to regulate magnitudes such as interest rates, money supply, and availability of credit with a view to achieving the ultimate objective of economic policy mentioned in the Reserve Bank of India Act, 1934.

2.inflation (noun)

Hindi Meaning - मुद्रास्फीति
English Meaning - simply meaning “cost of living”; an increase of price level of goods & services and vice versa decrease of currency value.

3.derail (verb)

Hindi Meaning - पटरी से उतरना, बाधा डालना, रोकना
English Meaning - obstruct, impede, hinder, hamper, block, interrupt, thwart, stop, restrict.

4.revival (noun)

Hindi Meaning - पुनः प्राप्ति, पुनर्जीवन
English Meaning - improvement, rallying, picking up; revitalization, restoration.

5.accompanying (adjective)

Hindi Meaning - जुड़ा हुआ, संबद्ध, जुड़ा
English Meaning - associated, connected, related, attendant.

6.reflect (verb)

Hindi Meaning - प्रतिबिंबित होना, इंगित करना, दिखाना
English Meaning - indicate, show, display, demonstrate, reveal, exhibit.

7.dilemma (noun)

Hindi Meaning - दुविधा, कठिनाई
English Meaning - quandary, predicament, difficulty.

8.confront (verb)

Hindi Meaning - सामना करना, परेशानी
English Meaning - trouble, bother, burden, distress, beset, annoy, vex, irritate.

9.monetary authority (noun)

Hindi Meaning - मौद्रिक प्राधिकरण, मुद्रा-प्राधिकारी
English Meaning - it refers to the institution responsible for managing the currency of a country, establishing interest rates, and controlling its money supply. The goals of a country’s central bank include stabilizing prices, fostering economic growth, and increasing employment. The Reserve Bank of India (RBI) is the central bank of India.

10.unanimously (adverb)

Hindi Meaning - सर्वसम्मति से, विरोध के बिना
English Meaning - without opposition, agreed to by everyone involved.

11.demur (verb)

Hindi Meaning - विरोध, असहमति
English Meaning - protest, dissent, differ/disagree.

12.accommodative (adjective)

Hindi Meaning - उदार, समझौतापरक
English Meaning - aimed to encourage economic activity by reducing interest rates.

13.stance (noun)

Hindi Meaning - मुद्रा, स्थिति, दृष्टिकोण
English Meaning - position, approach, standpoint.

14.as long as (phrase)

Hindi Meaning - जिस वक़्त, उसे उपलब्ध कराया
English Meaning - provided that.

15.flag (verb)

Hindi Meaning - झंडा, इंगित करना, पहचानना
English Meaning - indicate, identify, point out.

16.benchmark (noun as modifier)

English Meaning - standard, base/basis, ideal.

17.The monetary policy committee (MPC) (noun)

English Meaning - it is a six-member panel that is expected to bring “value and transparency” to rate-setting decisions. It will feature three members from the RBI — the Governor, a Deputy Governor and another official — and three independent members to be selected by the Government. The MPC will meet four times a year to decide on monetary policy by a majority vote.

18.saver (noun)

English Meaning - a person who regularly saves money, especially by paying it into a bank account.

19.rein in (phrasal verb)

English Meaning - to control, restrain, restrict, limit someone/something.

20.accommodation (noun)

English Meaning - adjustment, adaptation, attunement.

21.prolonged (adjective)

English Meaning - lengthy, extended, protracted, continuing, unending, unrelenting.

22.monetary accommodation (noun)

English Meaning - monetary accommodation is monetary policy that is well accommodative. Monetary accommodation is when the central bank keeps interest rates low. Low interest rates encourage borrowing and investment, which theoretically spur employment and economic growth (but also inflation). In India, the central bank-the Reserve Bank of India, i.e. “The RBI”-is the one that controls whether monetary policy is accommodative or not.

23.pose (verb)

English Meaning - constitute, present, create, cause (a problem or danger or risk).

24.outlook (noun)

English Meaning - prospects, expectations, hopes, likely improvement, lookout, future.

25.posit (verb)

English Meaning - put forward, set forth, present, propose.

26.mitigate (verb)

English Meaning - alleviate, reduce, diminish, lessen.

27.distress (noun)

English Meaning - difficulty, trouble, hardship.

28.arguably (adverb)

English Meaning - possibly, conceivably, maybe, potentially.

29.far more (phrase)

English Meaning - a lot more, much more.

30.marginal (adjective)

English Meaning - small, minute, low, minor, insignificant, minimal, negligible.

31.mixed bag (noun)

English Meaning - collection of diverse elements (win, victory & defeat, loss).

32.projection (noun)

English Meaning - estimation, forecast, prediction, calculation.

33.fiscal (year)(noun)

English Meaning - financial year.

34.cut (verb)

English Meaning - reduce, decrease, lessen.

35.basis point (BPS) (noun)

English Meaning - a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equivalent to 0.01% (1/100th of a percent). Used for measuring change in interest rate/yield.

36.stress (verb)

English Meaning - emphasize, underline, underscore, highlight, bring to the fore, accentuate.

37.core inflation (noun)

English Meaning - it is a measure of the total inflation within an economy, excluding commodities such as food and energy prices (which change frequently).

38.headline inflation (noun)

English Meaning - it is a measure of the total inflation within an economy, including commodities such as food and energy prices.

39.persist (verb)

English Meaning - continue, remain, linger, stay.

40.elevated (adjective)

English Meaning - higher/greater (than normal).

41.ameliorate (verb)

English Meaning - make better, enhance, improve (a bad or unpleasant situation).

42.Inflationary/price/cost pressures (noun)

English Meaning - the demand and supply-side pressures that can cause a rise in the general price level; cost-push inflation, hot-economy, deficit finance.

43.calibrated (adjective)

English Meaning - carefully assessed.

44.so as to (phrase)

English Meaning - in order to.

45.address (verb)

English Meaning - tackle, deal with, attend to, try to sort out.

46.pump price (noun)

English Meaning - the retail selling price of petrol/diesel (to the public).

47.acknowledgment (noun)

English Meaning - acceptance, admission, recognition, realization.

48.contain (verb)

English Meaning - control, restrain, limit.

49.reiterate (verb)

English Meaning - repeat, say again, restate.

50.plea (noun)

English Meaning - appeal, petition.

51.step in (phrasal verb)

English Meaning - intervene, become involved, get involved.

52.inflationary (adjective)

English Meaning - tending to cause monetary inflation.

53.pass-through (noun)

English Meaning - passing on a cost to a customer.

54.dissent (noun)

English Meaning - disagreement, difference of opinion, opposition.

55.mandate (noun)

English Meaning - instruction, direction, order, requirement.

56.anchor (verb)

English Meaning - impart/give a firm base/foundation/basis.

57.tacitly (adverb)

English Meaning - implicitly, indirectly.

58.concede (verb)

English Meaning - admit, acknowledge, accept, recognize.

59.wind down (phrasal verb)

English Meaning - come to an end, draw to a close, wind up, close down.

60.pandemic (noun)

English Meaning - the worldwide spread of a new disease; The illness spreads around the world and typically affects a large number of people across a wide area.

61.liquidity (noun)

English Meaning - the availability of liquid assets; liquidity means liquid assets; cash; (liquid asset is an asset which can be easily sold/converted into cash without losing its value) ; a measure of activity (i.e. the ability to buy or sell easily) in a market.

62.suspension (noun)

English Meaning - termination, debarment, eviction, elimination.

63.Government Securities Acquisition Programme (G-SAP)(noun)

English Meaning - In the recent bi-monthly monetary policy announcement, the RBI promoted a new programme — the Government Securities Acquisition Program (G-SAP) . The initiative is believed to be a counterpart of Open Market Operations (OMOs) — the purchase and sale of government securities (G-Secs) by the RBI on behalf of the government — to reduce the volatility in the bond market.

64.outline (verb)

English Meaning - indicate, delineate, give a rough idea of, summarize.

65.measure (noun)

English Meaning - action, step, procedure.

66.drain out (phrasal verb)

English Meaning - empty (something) completely; use up, exhaust, deplete, consume, expend.

67.surplus (noun)

English Meaning - the amount of an asset or resource that exceeds the portion that’s actively utilized.

68.cite (verb)

English Meaning - refer to, adduce, make reference to, invoke.

69.seemingly (adverb)

English Meaning - apparently, evidently, outwardly.

70.impulse (noun)

English Meaning - (strong & sudden) urge/instinct, compulsion, need.

71.prognostication (noun)

English Meaning - prediction, forecast, projection.

72.uncertainty (noun)

English Meaning - unpredictability, unreliability, riskiness/precariousness.

73.caveat (noun)

English Meaning - warning, caution, red flag.

74.contact intensive (adjective)

English Meaning - relating to the industries/sectors that have an average physical proximity index over 60. E.g. hospitality, travel, beauty and wellness, aviation etc. (Physical proximity index quantifies/measures the extent to which different occupations require physical proximity for work to be carried out).

75.non-contact intensive (adjective)

English Meaning - relating to the industries/sectors that have an average physical proximity index below 60. E.g. financial, real estate and professional services etc. (Physical proximity index quantifies/measures the extent to which different occupations require physical proximity for work to be carried out).

76.hit (verb)

English Meaning - affect, damage badly.

77.considerably (adverb)

English Meaning - substantially, sizably, very much, a lot.

78.lag (verb)

English Meaning - fall behind, fall back, trail behind, linger, delay, move slowly.

79.nowhere near (phrase)

English Meaning - off target, inaccurate, off course.

80.rebound (noun)

English Meaning - recovery, rallying, picking up (after a decline).

81.investment demand (noun)

English Meaning - the demand by businesses for physical capital goods and services used to maintain or expand its operations.

82.so far (phrase)

English Meaning - until now, up to the present, up to this point.

83.tailwinds (noun)

English Meaning - tailwinds describe a situation or condition that will move growth, revenues, or profits higher. Whereas headwinds (in business) situations or conditions that make growth harder/difficult.

84.capital inflow (noun)

English Meaning - a steady movement of capital (amount)into a place, economy, activity etc.

85.uncertain (adjective)

English Meaning - changeable, variable, irregular, unpredictable, unreliable, unsettled, unstable, fluctuating.

86.growing (adjective)

English Meaning - increasing.

87.gear (verb)

English Meaning - prepare, equip.

88.imminent (adjective)

English Meaning - close/near, about to happen, approaching/impending.

89.normalisation (noun)

English Meaning - the process of bringing something (e.g. economic activity) back to a normal condition.