THE HINDU Editorial Vocabulary- October 5, 2016- Topic 1
The Monetary Policy
Committee’s decision, at its maiden meeting, to cut the benchmark repurchase (repo) rate by 25 basis points held no surprise for markets. What
had been on watch was the language
of the policy statement, the extent of consensus in the committee and the
manner in which the new Reserve Bank of India Governor and chairman of the MPC,
Urjit Patel, presented the central bank’s positions. Articulating the main concern
that informed the newly constituted rate-setting panel’s rationale for reducing
interest rates, Mr. Patel said the global demand environment was clearly
looking far bleaker than previously anticipated, with the forecast for world
economic growth set to be downgraded further. The focus, he signalled,
therefore needs to remain on supporting the domestic economy through an
accommodative monetary stance. That the MPC has opted to lay primacy on
‘supporting growth’ while keeping its sights firmly trained on the RBI’s
central remit to target a medium-term retail inflation objective of 4 per cent,
within a band of plus/minus 2 per cent, bodes well. Decision-making by
committee is never easy, and given the short time the MPC had since its
constitution last month, the lucidity of the policy statement shows its six
members have hit the ground running. While the minutes of the meeting — that
will reveal each member’s arguments — will become available on October 18, all
six voted for the rate cut. The decision reflects the broad consensus that the
risks to growth from global uncertainty and financial markets volatility remain
high, especially ahead of the U.S. presidential election, and that a rate
stimulus was warranted given the recent slowing in retail inflation.
Even as it expects an
improvement in the outlook for food inflation on the back of increased sowing
and supply management measures undertaken by the government, the MPC has been
cautious in flagging the risks to the trajectory for price gains. In the panel’s
opinion, the main factors that could play a contributory role in furthering a
fresh ‘cost spiral’ would be the higher house rent allowances mandated by the
Seventh Pay Commission, the increase in minimum wages and the possible
spillovers through minimum support prices. Multiple factors augur well for the
outlook for both the industrial and services sectors. But the worsening trade
demand could offset the gross value added (GVA) momentum, the MPC noted, while
retaining the RBI’s GVA growth forecast of 7.6 per cent. That the panel has
made a decisive start to rate-setting through deliberation is clear; how it
weathers harsher domestic and external challenges, should they emerge, remains
to be seen.
Vocabulary
Extent: the area covered by something.
Example: An enclosure ten
acres in extent
Synonyms: area, size, expanse, length, proportions, dimensions
Articulating: express an idea or feeling fluently
and coherently.
Example: They were unable
to articulate their emotions
Synonyms: express, voice, vocalize, put
in words, communicate, state
Rationale: a set of reasons or a logical basis for a course of action or a particular
belief.
Example: He explained the
rationale behind the change
Synonyms: reason(s), reasoning, thinking, logic, grounds
Remit: cancel or refrain from exacting or inflicting a debt or punishment.
Example: The excess of the
sentence over 12 months was remitted
Synonyms: cancel, set
aside, suspend, revoke, abrogate
Lucidity: the quality of being clear, in particular.
Synonyms: light, bright, clear
Volatility: the quality or state of being irritable.
Example: Symptoms include
insomnia and irritability
Synonyms: irascibility, testiness, touchiness, grumpiness
Trajectory: the path followed by a projectile flying or an object moving under the
action of given forces.
Example: The missile's
trajectory was preset
Synonyms: course, path, route, track, line, orbit
Augur: of an event or circumstance portend a good or bad outcome.
Example: The end of the
Cold War seemed to augur well
Synonyms: bode, portend, herald, be a sign of, warn of, forewarn of, foreshadow
Decisive: settling an issue; producing a definite result.
Example: The Supreme Court
voided the statute by a decisive 7–2 vote
Synonyms: deciding, conclusive, determining, key, pivotal, critical, crucial
