Rate hike: Is RBI expecting stronger inflationary pressures in near future?

Raising rates now avoids the risk of more aggressive tightening later

An interest-rate hike in time saves nine. Well, a couple, anyway. 

By tightening the screws by a quarter percentage point for the second time since June, the Reserve Bank of India may have earned itself a fighting chance to stay pat for the rest of the calendar year.

Ahead of Wednesday’s decision, short-term rates of 6.25 per cent were barely keeping pace with core inflation at a four-year high of more than 6 per cent. A bigger motivation to raise them sooner rather than later is expectation of even stronger inflationary pressures in the near future when the government starts