Rajanomics: tame prices, reap growth

Cooling prices is priority. Growth will follow. That seems to be the broad message from Reserve Bank of India (RBI) governor Raghuram Rajan as he unexpectedly raised the repo rate — RBI’s key lending rate — by 0.25 percentage points to 8% on Tuesday. The RBI’s latest move signalled the central bank’s resolute commitment towards price control by raising borrowing rates to cool demand as its topmost priority, even if it may cast side effects on growth in the broader economy.

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