Kochi: The Indian central bank’s primary concern is maintaining price stability and inflation must be low and stable, its top official said on Tuesday.
The Reserve Bank of India (RBI) raised interest rates last week at its policy review for the eighth time since last March, in line with expectations, and warned both of inflationary pressures and emerging risks to growth.
“Primary concern of any central bank including RBI is maintaining price stability... We are concerned about the rise in prices... Inflation must be low and stable,” RBI governor D. Subbarao said in a speech in Kochi.
RBI in the policy review last week said it was likely to maintain an anti-inflationary bias, reinforcing market expectations that more rate increases are in the pipeline.
It also raised its forecast for headline inflation at the end of March to 8%, from an earlier 7%.
India’s wholesale price index rose an annual 8.31% in February on higher fuel and manufactured product prices, well above the Reuters forecast of 7.79% and higher than January’s 8.23%.
Subbarao said RBI prefers foreign direct investment over short-term investment by offshore institutional investors.