Further tightening could push growth down to 5%: MPC member Ashima Goyal

Continuing to raise nominal repo rates until core inflation falls could imply an overshooting or excess tightening of real rates, says the MPC member in an interview with Business Standard

Ashima Goyal, a member of the RBI's MPC who voted against the panel's latest rate hike, spoke to Business Standard's Bhaskar Dutta. She spoke about how further tightening could affect the interest-elastic components of aggregate demand, potentially pushing down GDP growth towards 5 per cent.

Edited excerpts:

You voted for a pause in rate hikes based on several factors, including risks of over-tightening. Since the last policy statement, however, inflation has surprised sharply on the upside. Does this alter your reading of the situation?

My main reason for the pause was that we had reached the contractionary real rate appropriate