RBI action signals expansion of balance-sheets...

Yes, Rajan this time too made everyone surprise when he did not move interest-rate as per the popular expectation... a rate cut... But, he was right that he had no reason to cut-down except oil-prices... Inflation data is awaited... Governor’s job as it seems does not enjoy complete independence in stoking employment and growth and the public-side is always under pressure to perform in the face of formidable opponents... Who just say the opposite... always try to get limelight by making burning comments... to get space in the voters memory... Issues are very important in political-economy... and most importantly the majority issue since resources are scarce....  Here the government who does all the public-spending need more followers... Politics runs on populism... But, the work of a RBI governer whois responsible for money-supply, inflation, and employment directly through its monetary-policy is again a tough job... It needs reconciliation... Anybody has noticed or not the RBI has always, in most occasions has tried to improve liquidity in the market under expectations... Even Subbaro under pressure from government tried to cut down the cycle by easing rates earlier than required... Food prices started coming down but the rate cut pushed them again to 10% and then again he started tightening which the governor continued when he joined the bank... Even today the RBI has reduced SLR to release more funds for the industry... Banks can now lend more at current rates... kind of expansion... Many at economic-times noticed... Few injections through open market operations... whenever injection of money to commercial banks increases in any form... it affect interest rates... bonds offer a good guidance... Even today bonds yields decreased... money-supply make the commercial banks and bond traders adjust their margins... Since money-supply has been increased through a reduction in SLR bond yields have gone down... Recently, both the RBI and the GoI tried to give infrastructure a push through many relaxations... Even the RBI has announced reduced CRR requirements for banks lending to the infrastructure sector...