The Reserve Bank of India’s bold decision to increase the policy repo rate to 8 per cent (“A surprise from the RBI”, Jan. 30) caught many people unawares. But it was a calculated move, triggered by the persistently high Consumer Price Index inflation. However, for a true and long-lasting course correction, our growth rate has to improve substantially, along with an increase in investment, export performance and industrial manufacturing.
V. Sethuraman, Chennai
What is really a matter of surprise here is the muted reaction from industry captains and bankers — in December they had raised Cain when the RBI refused to reduce the repo rate — to the central bank’s decision this time round. One is inclined to understand that industry reaction, therefore, is not necessarily based on the impact of an alteration in policy but, rather, on the personality effecting it. The RBI has always been consistent — even under D. Subbarao it had stood fast against demands to reduce the repo rate.
A.V. Narayanan, Tiruchirapalli
Keywords: RBI monetary policy