RBI more independent today, says Morgan Stanley on Viral Acharya’s comment

American brokerage Morgan Stanley Tuesday said the Reserve Bank is more independent than it was in the past and the debate triggered by deputy governor Viral Acharya last week illustrates the progress on this front. Desai said both present Governor Urjit Patel and his predecessor Raghuram Rajan got the issue of independence sorted out with Prime Minister Narendra Modi, when the Monetary Policy Committee for rate setting was formed. It can be noted that Acharya had mentioned about the MPC as a work in the right direction but rued the absence of the same independence in other areas like regulations, balance sheet management etc. He said the markets have not yet factored in the outcomes of the general elections which are months away and investors will make their moves starting early December, once the outcomes of the forthcoming state polls are clear. Morgan Stanley is underweight on information technology, as it feels the IT story is done and does not expect the currency tailwinds to last long.

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