RBI has done what it can with interest rates; inflation control now falls to government

The Reserve Bank of India's Monetary Policy Committee decision to raise interest rates appears designed primarily to manage expectations around future inflation rather than tackle current inflation levels. This suggests the central bank believes it has limited room to act further on the rate front.

The heavy lifting on inflation control now rests with the government through fiscal and other policy measures. Rate hikes alone cannot address the structural factors driving price pressures in the economy.