According to Monetary Policy Committee (MPC) member J.R. Varma on Friday, the effectiveness of the Reserve Bank of India’s interest rate increases in containing inflation is still unclear, and the speed of rate adjustment will rely on the status of the economy.
“We would like to hasten the decrease of (inflation) to 4% if there is strong economic development. Nevertheless, a slower rate of adjustment would be fair if the economy is experiencing difficulties “Varma stated in the discussion for Reuters Trading India.
In August, the central bank increased its main policy repo rate by 50 basis points (bps), bringing the total increase since May to 140 bps. It must make its next policy decision on September 30.