Raghuram Rajan says RBI focus still on inflation

New Delhi: Reserve Bank of India (RBI) governor Raghuram Rajan said Monday that fighting rising prices will continue to be the central bank’s priority and a call on raising interest rates will be taken after factoring in more data.

“Nobody should doubt our desire to fight inflation and our belief that interest rates are our main tool that we have. Nobody should doubt that,” Rajan said.

He said RBI will wait for the next set of data on inflation and industrial growth before taking a call on interest rates. “We want to see data on how the work we have done so far is playing out and then we will take the next step,” he said in a TV interview. “Don’t judge me by whether I raise interest rates in every meeting.”

Rajan increased the key interest rate twice by 0.25% each in successive monetary policies, but refrained from hiking it further at the 18 December mid-quarter monetary policy review despite high inflation.

The repo rate at which RBI lends to banks is currently at 7.75%. Retail inflation climbed to a nine-month high of 11.24% in November, while wholesale price inflation rose to a 14-month high of 7.52% last month. The next policy review is scheduled on 28 January.

Gold smuggling into India will pick up if the import curbs continue for too long, Rajan said in an interview to television channel CNBC Awaaz on Monday.

India will keep a tight leash on gold imports despite a recent improvement in its trade deficit and lobbying by a bullion industry struggling with high premiums and a supply crunch.

Earlier this year, there were a series of curbs on imports of gold—the second most expensive item on India’s import bill—hoping to ease the pressure on the currency. The measures included hiking import duties on gold to a record 10%.