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Inflation still above comfort level: RBI

Inflation still above comfort level: RBI
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First Published: Mon, Nov 01 2010. 05 57 PM IST
Updated: Mon, Nov 01 2010. 05 57 PM IST
Mumbai: The Reserve Bank of India (RBI) said on Monday inflation remained above its comfort level and elevated food price inflation is cause for concern.
“While moderating momentum of the non-food manufactured inflation suggests that recent monetary actions are having an impact, inflation still remains above the comfort level,” the RBI said in a report a day before it is widely expected to raise interest rates by 25 basis points.
It said the objective of non-disruptive normalisation of the policy rate seems to have generally been met against the backdrop of a robust growth outlook.
The central bank report said steps taken since January 2010 could help in moderating headline inflation by the end of March.
“Going forward, the growth-inflation outlook will dominate the policy response, and the nature and timing of monetary policy actions would have to be conditioned by their expected effectiveness in attaining the intended goal,” the RBI report said.
Headline inflation in India inched up to 8.62% in September on higher food prices from 8.5% in the previous month, after six straight months in double-digits through July.
The central bank’s inflation comfort zone is perceived to be around 5% or 6%.
The RBI is expected to raise rates for the sixth time this year to try control stubbornly high inflation pressures in the fast-growing economy, a Reuters poll showed.
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First Published: Mon, Nov 01 2010. 05 57 PM IST