Unduly hawkish: RBI's focus on rate hikes will hit consumption, investment

While the RBI governor, Raghuram Rajan, has done well to bring in interest rate futures and other policies like credit enhancement for corporate bonds, it is unfortunate that he has chosen to lay more emphasis on the CPI than on the traditional WPI while gauging inflation. The excessive reliance on the CPI suggests that one or more rate hikes will take place over the next six months.

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