4 min read.Updated: 05 Aug 2022, 11:56 AM ISTIndira Rajaraman
A rate hike is necessary to prevent a tanking rupee from raising the country’s fuel import bill and worsening price instability
Today, 5 August, the monetary policy committee (MPC) will announce its decision on the policy rate. It is expected to be raised by between 0.25 and 0.50 percentage points. Monetary tightening carries a growth sacrifice, but inflation permissiveness can be seriously destabilizing. The issue of course is how successful monetary tightening will be in curtailing inflation.