Maintain credibility

MPC should not ignore inflation risks

It is important for the Monetary Policy Committee (MPC) to maintain credibility to attain longer-term objectives of price stability and higher growth. The comments made by Jayanth Varma, an external member of the MPC, in the last policy meeting and an interview to this newspaper on Monday highlighted important issues regarding the conduct of the monetary policy and they need to be widely debated. Mr Varma had expressed his reservations on maintaining the accommodative stance and argued that the current reverse repo rate was too low and needed to be raised. Interestingly, the MPC of the Reserve Bank of India