<h1>Monetary Policy in India: Interest Rate Hikes Significantly Impact Investment and Imports, Study Finds.</h1> A study using a structural VAR model analyzed the impact of monetary policy on aggregate demand in India from 2000 to 2011. It found that interest rate hikes significantly reduce aggregate demand, with the most substantial effects on investment and imports. Private consumption and exports are less affected, while government consumption remains largely unchanged. The interest rate channel is the primary driver of these fluctuations, overshadowing the exchange rate channel. The study highlights that monetary policy, particularly interest rates, plays a crucial role in influencing economic activity in India, with investment being the most sensitive component.