MUMBAI: India’s central bank chief Raghuram Rajan joked Tuesday that it would be “cruel” to end intense speculation surrounding his future as he held interest rates in the world’s fastest-growing large economy.

The Indian media is abuzz with predictions about whether the popular central banker, often dubbed “Rockstar Rajan”, will be given a second three-year term as governor when his current contract expires in September.

“It would be cruel of me to spoil the fun the press is having,” Rajan told reporters following the Reserve Bank of India’s (RBI) monetary policy review meeting in Mumbai.

“In all such cases the decision is reached after discussions between the government and the incumbent. I’m sure you will know when there is news,” he added, reading a prepared statement.

Rajan, who famously predicted the 2008 global financial crisis, enjoys a mass appeal in India not normally associated with a banker, with one newspaper previously even comparing him to James Bond. The former IMF chief economist has been widely credited with bringing stability to India’s economy since his appointment as RBI governor in September 2013.

But he has clashed with Prime Minister Narendra Modi’s Hindu nationalist government over how quickly the central bank should cut rates, fuelling the speculation over his future. A decision is not expected until August.

On Tuesday the RBI held its key interest rate at a five-year low, citing inflationary fears ahead of the imminent monsoon rains.

In a widely expected move, the bank said it would keep the benchmark repo rate, the level at which it lends to commercial banks, at 6.5 per cent.

All 44 economists in a Bloomberg News survey predicted that the bank would hold rates after it cut them by 25 basis points in April to their lowest level since early 2011.

In the same month, inflation quickened more than expected as consumer prices rose 5.4pc from a year earlier, driven up by higher food prices, catching many economists by surprise.

“The inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain,” the RBI governor said in a statement following the monetary policy review meeting in Mumbai.

Rajan, who has made taming India’s once-runaway prices a priority of his tenure, has set a goal of limiting inflation to 5pc by March 2017.

Published in Dawn, June 8th, 2016