With increasing global integration, global commodity prices are having an increasingly significant influence on domestic prices. It is expected that global commodity prices will peak in 2011 which should provide some relief to domestic inflation scenario. 10  BIS central bankers’ speeches  The Reserve Bank signaled the reversal from its crisis driven expansionary monetary policy stance in October 2009.
Since then, the cash reserve ratio (CRR) has been raised by 100 basis points. The policy repo rate has been raised by a cumulative 325 basis points. As the liquidity in the system transited from surplus to deficit, the effective tightening has been of the order of 475 basis points. Thus, the cumulative monetary policy action would have the desired impact on inflation.