More tokenism

By conventional logic , the Reserve Bank of India (RBI) has done the right thing by not succumbing to pressure from industry and even the Government to cut its benchmark interest rates in its latest quarterly monetary policy review. With annual wholesale inflation at 7.8 per cent in September – that too on a high ‘base’ of 10 per cent for the same month of last year – and the effects of a weak rupee and the recent fuel price increases yet to be fully passed-through to the wider economy, lowering interest rates now would have signalled its helplessness in containing inflation. 

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