The RBI will also follow the policy normalization process in the near future

- Central banks in South Korea, the United Kingdom, South Africa and the US raise interest rates after the epidemic

Global central banks have raised interest rates from low levels during the epidemic period. Russia has also had to raise interest rates amid geopolitical tensions. It now has an interest rate of 20 per cent, which is 17.5 per cent higher than the epidemic.

The central banks of many countries are taking such action. In Brazil, interest rates are now at 11.5 per cent and are now 2.8 per cent higher than their lowest level during the worst of the epidemic. The central banks had earlier cut interest rates in the early stages of the Covid-12 crisis to support the economy.

Now it is being decided to increase the rates to normalize the rates as well as to control inflation. Other countries where central banks have raised interest rates include South Korea, the United Kingdom, South Africa and the US.

The main interest rates for these regions vary from 0.5 per cent (Euro area) to 5 per cent (India and South Africa). The RBI's March 203 bulletin states that the central bank's action is justified globally. In most emerging market economies, central banks have also begun tightening policy, including in Mexico, which raised its benchmark interest rate by 20 basis points in February. In response to the crisis, the Bank of Russia raised its key rate by 10.5 per cent to 20 per cent on February 8, 2008 due to unfavorable external conditions, as well as the risks of currency devaluation and rising inflation.

The People's Bank of China, on the other hand, has stopped raising rates, while Turkey's central bank has also stopped raising rates for the second month in a row. Balancing inflation is a global challenge to support economic recovery. Emerging market economies face a variety of issues, including capital inflows and geopolitical risks. Inflation in India is 4.05%. Thus, it is included in the top eight countries. In Brazil it is up to 10.8 percent. Inflation in South Korea is 7.5 percent.

In many developed countries and regions, India's upper band is below the inflation target of less than 3%. In the eurozone, for example, it is 4% higher than in the medium term. The current figure is 7.5 percent. The sector is facing high inflation amid geopolitical tensions which has also affected its approach to raising interest rates.

Inflation is likely to remain high due to geopolitical tensions and its impact on commodity prices, Morgan Stanley's IndiaEconomics report said. According to the report, the RBI may soon raise rates. An increase in the repo rate is expected at its old meeting. But it is now possible that the policy normalization process will be followed by an increase in the reverse repo rate in April. If the Reserve Bank delays its normalization process, the risk of a disruptive policy rate hike will increase.