Raghuram Rajan gives historical context for raising rates, says doing so won’t be “Anti-National”

As inflationary pressures rise and calls for increasing policy rates grow, former Reserve Bank Of India (RBI) Governor Raghuram Rajan has participated into the debate by saying that RBI will have to increase the rates at some point in time.

 

He also suggested to politicians and bureaucrats that increasing the policy rates to tame inflation is not “some anti-national activity” but an investment in the country’s economic stability. In a post on LinkedIn, Mr Rajan said that the war against inflation is never over, and it would be helpful if the central bank remembered: “what happened the last time around?”

While the RBI has maintained the status quo on policy rates to support domestic growth, their being uncomfortable with rising inflation increases, the central bank has hiked the inflation projection for this financial year to 5.7 per cent from 4.5 per cent. It has also cut back its growth forecast to 7.2 per cent from 7.8 per cent, making inflation a priority.

In the LinkedIn post, Mr Rajan advised politicians and bureaucrats to understand that the rise in policy rates is not “some anti national activity benefiting foreign investors, but is an investment in economic stability, whose greatest beneficiary is the Indian citizen.