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Some monetary tightening required to tame inflation: PMEAC

Some monetary tightening required to tame inflation: PMEAC
PTI
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First Published: Fri, Jan 14 2011. 01 37 PM IST
Updated: Fri, Jan 14 2011. 01 37 PM IST
New Delhi: The Prime Minister’s economic panel on Friday said he favoured “some tightening” of money supply by RBI later this month in case the prices do not come down as inflation rose to higher than expected level of 8.43% in December.
“The inflation rate for December has turned out to be much higher than what was originally expected... Given the present situation, perhaps some tightening on the part of the Reserve Bank may be required,” Prime Minister’s Economic Advisory Council chairman C. Rangarajan told the news agency.
The overall inflation for December, measured on the basis of wholesale prices, increased to 8.43% in December, from 7.48% in November.
The Reserve Bank is widely expected to hike key policy rates by 25-50 basis points in its quarterly monetary policy review meeting on 25 January.
RBI raised key policy rates six times last year. But it paused its rate hiking spree in November review.
Food inflation has remained high through December touching the year high level of 18.32%. It finally eased somewhat for the week ended 1 January to 16.91%.
“Unless there is some substantial decline in the food prices in the next two weeks, in my view, perhaps some tightening may be required,” Rangarajan said.
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First Published: Fri, Jan 14 2011. 01 37 PM IST
More Topics: Inflation | Food inflation | WPI | PMEAC | C Rangarajan |