A hike in the key policy rates by 50 basis points has certainly taken the markets by surprise. The central bank has retained the economic growth estimate at 8 per cent for the current fiscal but has raised its March-end inflation projection to 7 per cent from 6 per cent. The current level of inflation, at 9.44 per cent, is well above the RBI's comfort zone of 4 per cent. The monetary policy stance, therefore, continues to be anti-inflationary and it is clear that the RBI is prepared to sacrifice growth in the near-to-medium term for the sake of moderating inflation. True, the frequent rate hikes aren't good for the country, as it will slowdown economic activities, but if the past is any indication, let's understand that the central bank is in the right position to judge things and make policy initiatives to take the economy forward.
S. Umashankar, Nagpur (HBL)
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