Inflation is the relentless phenomena for every country in the world. In the third week of July 2008, inflation climbed to 11.98. It may not have crossed the significant mark of 12. The R.B.I. hoped to contain inflation with a 5 – 5.5 band. However, given the current scenario, RBI has got the target of 7 by March 2009. Stiff hikes in the repo rate and CRR will go a long way in reducing inflation. Reference- Editorial Column, The Hindu dated Aug.5 2008. However, rising inflation coupled with depreciating US cause tight liquidity conditions and a slowdown in the global economy is an unexpected challenge for the policy makers across the globe.