The rupee, which has been on a relentless slide, breached the psychologically-crucial level of 80-a-dollar mark on Tuesday, following a 5% surge in the price of Brent crude oil. Today, at around 79.97 rupees to a dollar, the unit is just shy of those lows. The dollar index, which measures the strength in the US currency against a basket of six other major units, rose to a near two-decade high of 109.29 this month, as traders braced for aggressive rate hikes by the US Federal Reserve to curb rising inflation. Pan believes that the recent measures undertaken by the central bank to stem the decline in rupee would be better appreciated if they coincided with the next meeting of the RBI’s Monetary Policy Committee. "If there was any requirement of these measures, then it should have been announced with the policy," Pan says. "Because my sense is that it sets in negative sentiment for the currency markets, whereby the markets start reading the scenario as scary from the RBI’s perspective." The next meeting of the rate-setting panel is scheduled for Aug 2-4. Pan expects a 40-50 basis point hike in the repo rate at the meeting. At its meeting last month, the committee raised the repo rate by 50 bps to 4.90%, the second hike in just over a month after it had raised the policy rate by 40 bps to arrest the trend of rising inflation. Pan says, reaching the target of 4% retail inflation rate is not likely in this financial year ending March but this may be possible next fiscal owing to the higher base of this year. Following are the edited excerpts of the interview: Q. CPI inflation in June eased marginally to 7.01% from 7.04% in May. Do you believe inflation has peaked? How do you see the trajectory, going forward? A: Surely, I think inflation has peaked - unless there are some nasty surprises coming from somewhere. So, the trajectory will be determined by global commodity prices, which are on a softening bias. But again, it is very difficult to put your fingers very squarely and say that they will continue to be so. The problem is that the currency is also depreciating. So, some of the positive impacts that you would have got from the softening bias in global commodity prices--due to an expectation of a slowdown if not a recession--will be neutralised. Having said that, the clear issue also is that the government has stepped up very significantly in terms of how it wants to control the end-use prices. For example, in terms of edible oils, the government did issue almost a directive to companies to actually reduce prices by 15 rupees per ltr. So, some of these actions will continue to benefit, along with the fact that kharif is likely to be a decent crop, given the progress of the monsoons. Some of the critical problem areas on prices on the food side continue to be egg, meat and fish, where we continue to see elevated prices because of input cost pressures. Otherwise, I don’t think there is much to worry on food inflation. In the fourth quarter, we see inflation coming down to RBI’s projected level of 5.8-5.9%. And that’s the only point in time we will see prints which are within the upper threshold of 6%.