INSUBCONTINENT EXCLUSIVE:
asked for restraint on future hikes in interest rates while others still believe in continuing with aggressive hikes.
The MPC hiked the
policy repo rate by 50 basis points (bps) to 5.9 per cent in the last policy review, announced on September 30
(100 bps = 1 percentage points)
External member Jayanth Varma who supported the 50-bps rate hike said it was time to pause as monetary
policy are large, as in India, overreaction can be very costly
Harmful effects become clear too late and are difficult to reverse
pressures remains incomplete
He said exchange rate volatility is amplifying these core price pressures, especially in view of key import prices being invoiced in the US
Taken together with a closing output gap, rising capacity utilisation in manufacturing, surging demand for services and the pick-up in
the eye of the new storm from aggressive policy tightening from central banks of advanced economies and their even more aggressive forward
In the near term, given limited comfort on price trends, we see a case for further rate tightening, but possibly by less than the latest
