There is little doubt that the RBI simply could not sit on its hands for very long in the current inflationary scenario. Even as the debate on appropriate policy responses to an inflationary surge driven by food and other commodity prices continues, the central bank is perceived as having the primary responsibility for price stability and its inaction in the face of sharply rising inflation would be viewed by many as an abdication of that responsibility. Under the circumstances, given the choice between raising the repo rate or the CRR, it opted for the milder of the two, an appropriate choice in the face of concerns that economic growth is slowing down. Its hand was strengthened a bit by the previous week
