Kolkata: Chief Economic Adviser to the
Finance Ministry Kaushik Basu on Saturday said the Reserve Bank
followed conventional methods of raising interest rates to
tame inflation which do not seem to have worked.
"I was concerned about the use of traditional methods by
RBI for anti-inflationary monetary policy to contain prices.
The RBI followed the text-bookish way to announce monetary
policy," Basu told reporters here.
He said the standard anti-inflation policies of raising
interest rates were not working, he said.
The central bank has hiked interest rates 13 times since
March 2010 in its bid to tame inflation.
Basu said raising interest rates to suck out liquidity
from the system would have disastrous effect on the economy.
On the persistent high food prices, he said the food
inflation is likely to come down in three weeks time and
overall inflation by the December end.
Food inflation was 12.21 per cent in the week ended
October 22, while the headline inflation in September (latest
data) was 9.72 per cent.