I Do What I Do

by Raghuram G. Rajan

I wanted to send four messages. First, we had to present a façade of confidence to assure the public and investors that the RBI knew what had to be done. Second, we would emphasize our commitment to bringing down inflation, which my friend, the Mexican central bank governor, Agustin Carstens, advised me, was in his long experience the best way to stabilize the currency. Third, we would signal the RBI could be bold and farsighted when the need arose – evidenced by the large number of measures that were announced, and our ability to look beyond the currency turmoil to discuss, for instance, the eventual internationalization of the rupee. Looking beyond the immediate problems would also suggest we were not overly pre-occupied with the current volatility. Finally, I wanted set standards for transparency and predictability, transparency through clear communication, and predictability by laying out what we at the RBI intended to do, so that we could be held to it. My