Central Banks
Let Hikes Sink in Before You Raise More, Warns India Rate Setter
- Rates can be raised if growth robust and inflation high: Varma
- Once most-hawkish monetary panel member has now turned a dove
The Reserve Bank of India raised the key lending rate to 6.5% on Feb. 8.
Photographer: Dhiraj Singh/BloombergThis article is for subscribers only.
India’s most dovish rate setter who warned of a severe growth hit due to aggressive policy tightening wants the central bank to pause, rather than stop, to assess growth-inflation dynamics before acting further.
“I do not recommend a ‘stop’ only a ‘pause’: if we see robust growth and stubborn inflation down the road, we should be ready to raise rates,” Jayanth Rama Varma, an external member in the policy panel, said in an interview by email. “Back in December, I recommended a pause at around 6%.”