Jayanth R Varma, one of the Monetary Policy Committee (MPC) members who voted for a repo rate pause in the August policy, says the rate hike since May 2022 is still working and is expected to maintain pressure on inflation — which rose to 15-month high of 7.44 per cent in July — over the next several quarters and bring it close to the Reserve Bank of India’s comfort band of two to 6 per cent.
Varma, Professor of Finance and Accounting at Indian Institute of Management, Ahmedabad, tells Hitesh Vyas and George Mathew that the spike in inflation due to a rise in vegetable prices lasts only a few months when monetary policy is conducted appropriately. Excerpts:
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