MONEY MATTERS

RBI’s (Reserve Bank of India) monetary tightening strategy in order to tame inflation has been supported by International Monetary Fund (IMF). The IMF has said in its Regional Economic Outlook for Asia- Pacific, “In economies where such overheating pressures remain high, inflation remains above target and inflation expectations have continued to rise, such as in China, India, and Korea, the current pace of monetary tightening remains appropriate.”

Currently the inflation is hovering around the double digit mark and in order to control this inflation RBI had already hiked interest rates 12 times since March, 2010. This hike in interest rates has slowed down the industrial output and there has been a demand to pause the interest hikes.

The IMF said, “Inflation has been driven by commodity prices, but also in many economies by sustained demand pressures.” It said that commodity price rise had fed to generalized inflation in countries like Hong Kong, India, Indonesia, Korea, Malaysia and Thailand.

The IMF said, “Inflation expectations have also risen since the first quarter of 2011 in a number of economies.” The multilateral lending agency projected that GDP growth across Asia would average 6.25% in 2011.

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