According to a recent study on inflation in India, it was found that money supply has been contributing around 30-35% to the inflation growth. RBI policy rates have moderated the takeoff of credit in a marginal but significant way. Inflation would have been at least 2-3% higher than what it is currently. A high inflation rate would have had an impact on cost and the wage structure of the economy and would have led to a situation of slowing growth. Therefore, the RBI’s ‘inflation targeting’ policy has been quite helpful in moderating inflation......
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