The RBI uses monetary tools to stymie demand and cool prices. The tug-of-war between sliding growth and rising inflation — which has forced the RBI keep interest rates high — appear to have hurt consumption demand.
Prime Minister’s Economic Advisory Council chairman C Ranagarajan feels the RBI may lower the policy rate later this month. “The numbers indicate a situation in which the RBI can stick to policy indications that it has given few weeks ago. Therefore, there is a possibility of making an adjustment in the policy rate downwards.”