More aggressive policy needed to check inflation: RBI official

NEW DELHI: The Reserve Bank needs to adopt a more hawkish monetary policy to tame inflation, a central bank official said two day after the apex bank raised key rates by up to 50 basis points.
"There is a need for aggressive monetary policy to anchor inflation," the RBI official said. "You are injecting liquidity at 5 per cent and inflation is at 10%.They will never be able to control inflation, everything else remaining the same," the official said.
The general inflation remained in double digit for the fifth consecutive month. For June, the wholesale price index (WPI) inflation stood at 10.55 per cent.
"Monetary policy works with a time lag," the official said, adding that adequate monsoon would have more impact in curbing inflation over the next three months as there would be a time-lag in cashing the benefits of tight monetary policy.
On Tuesday, RBI raised the short term lending (repo) and borrowing (reverse repo) rate by 25 basis points and 50 basis points respectively. The repo and reverse repo rate currently stands at 5.75 per cent and 4.50 per cent respectively. This is the fourth hike in key rates by RBI so far this year.
"Rates should have come up much higher (by now)," the official said after a meeting with senior finance ministry officials.
"RBI is not the real monetary policy maker," the official said, hinting that the finance ministry has a large role to play in monetary policy decisions.