Reducing inflation without raising interest rates

It is unfortunate that many see monetary policy and interest rate policy as synonyms. They are not

The target inflation rate is 4 per cent in India. So, the recent Consumer Price Index-based inflation rate at 6.4 per cent is 2.4 percentage points, or 60 per cent (2.4/4 x 100) higher than the target rate. Even the core inflation is somewhat stubborn at close to 6 per cent. And yet, the Reserve Bank of India (RBI) did not raise the repo rate in its meeting on April 6. Why?

A rise in the repo rate could have hurt not only economic growth but could have also lowered bond prices. A fall in bond prices can affect assets of