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Govt should pause rate hikes as growth fears loom: RBI MPC member Jayanth Varma -Swati Bhat

-Reuters/ Livemint.com

In spite of unacceptably high inflation, the Indian central bank should hold off on raising interest rates, according to Jayant Varma, a member of the monetary policy committee

India's central bank should pause interest rate hikes, despite unacceptably high inflation, to avoid stalling a recovery in economic growth, monetary policy committee member Jayant Varma told Reuters on Monday.

The Reserve Bank of India's monetary policy committee has raised its key repo rate by 190 basis points since the start of its tightening cycle in May, with net impact of all steps taken resulting in a close to 250 basis points increase, Varma said.

"There is no denying that inflation is unacceptably high but the thing is that we have given a strong dose of medicine and the time has come to wait and see if that medicine works or if we need something even more potent," he said.

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