Jun 14, 2011

India Should Hike Rates

A commodity price shock increases inflation and reduces growth. It creates a policy trade-off for authorities: Should I care about growth and postpone raising rates, or should I care about inflation by tightening at the cost of hurting growth? It creates, definitely, much more complicated policy challenges.

In India’s case, further tightening is reasonably warranted, given that growth has been robust and inflation has picked up, and also considering that policy rates remain negative in real terms. - in www.business-standard.com