Inflation is raising its ugly head once again, forcing the Central banks, the world over, to get into over drive to deal with the menace. In India, the situation is more worrisome as containing inflation could come at the cost of growth which has just begun to go full steam.

Central banks around the world are now leaving no stone unturned to curb the growing inflation. Apex banks from Seoul to Frankfurt to Toronto have been raising the cost of borrowing in a global wave to rein in the accelerating inflation. Federal Reserve, the US apex bank has raised the fed funds rate from 1% in mid-2004 to 5.25% to bring in the much-needed balance between sluggish growth and high inflation. Back in Asia, Central Bank of China increased the interest rates in March, for the third time in less than a year, mainly to check investment and credit growth and to keep the world's fourth-largest economy on an even keel. Even in India, where the economy is growing at around 9%, the RBI has intervened in a big way by hiking the Cash Reserve Ratio (CRR) by half a percent and repo rate by 50 basis points to keep a lid on inflation. Not the least, several central banks all over the world like the Bank of England, Bank of Japan, European Central Bank (ECB) and even Bank of Canada (BoC) have joined hands and are seriously contemplating monetary tightening to contain the inflationary situation.

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