Pause, please

When you give a gun to a soldier and then send him into battle to fight an identified enemy, he’s bound to shoot. So those who blame the Reserve Bank of India (RBI) for shooting by increasing interest rates in its declared battle against inflation are of course being unfair. Monetary policy is the only credible weapon in the central bank’s armoury and it is bound to deploy it. A central bank can squeeze out liquidity from the market in a variety of ways and raising interest rates is certainly one of them.

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