Montek terms RBI rate hike as aggressive

8220;I don8217;t think this is improper. You do need to send signals and if situation improves,he can reverse the position later. It the decision is bound to be effective in controlling inflation,8221; Ahluwalia said.

Asked if the high interest rates will moderate economic expansion,Ahluwalia said that long-term growth is not affected by small variation in rates.

8220;Some people will worry that impact on interest rates will be too high 8230; it is a matter of balance. If you really want to have good environment for growth you must bring inflation under control. Long-term growth is not affected by small variations in short-term interest rates,8221; he said.

The Reserve Bank today raised its short-term lending repo and borrowing reverse repo rates by 50 basis points to 8 per cent and 7 per cent respectively.

The apex bank has hiked its policy rates 11 times since March 2010,to curb inflation. Wholesale price-based inflation stood at 9.44 per cent in June.