Mumbai: Inflation in India had risen more than expected to unacceptably high levels, Reserve Bank of India (RBI) Governor Y.V. Reddy said, adding the central bank was ready to take action as required.
“The level of inflation is unacceptable to us and it is higher than our tolerance limit,” Reddy told CNBC-TV 18 in New York on Tuesday. The comments were aired in India on Wednesday.
The central bank wanted to contain inflation near 5% in the 2007-08 fiscal year that ended in March. Annual wholesale price inflation rose to 7.41% in late March, its highest in more than three years.
“We anticipated some inflationary pressures, but they turned out to be far more intense that what we anticipated so the matter has to be examined,” Reddy said.
“While this situation requires constant monitoring, any action, any time that is required will have to be taken,” he said.
The central bank’s next scheduled policy review is on April 29. Analysts think it may not raise interest rates because growth is moderating, and instead may increase banks’ reserve requirements.
Policy makers have scrapped import duties and banned exports for some commodities to try to cool price pressures in Asia’s third-biggest economy.