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The increase in the repo and reverse repo rates by 25 basis points each is along expected lines. In view of the rise in inflationary expectations, the measures announced will help tackle demand side pressures on inflation. The revision of inflation target from 7 per cent to around 8 per cent for March 2011 is pragmatic in view of the global political uncertainty, rise in the core inflation at home and insecurity on the commodity and energy fronts. Today's measures are a calibrated approach to containing inflationary expectations and, at the same time, would be non-disruptive to the growth process.
(The author is Chairman and Managing Director, Bank of India.)
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