Sending a signal: RBI should consider raising rates, even if by 25 bps

There is no room for overconfidence on the inflation front.

The Reserve Bank of India's monetary policy committee (MPC) will meet for three days from June 4 to examine the direction of monetary policy and interest rates. While the April meeting did not result in a hike, an examination of the minutes of that meeting reveals that many members of the MPC are hawkish about interest rates. If the MPC decides on a rate hike in June, even if just to signal the intent of the RBI, it would be a welcome step; it should not be postponed to the August meeting of the MPC, as some analysts have suggested.