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    Default RBI closely monitoring spiralling inflation

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    The Reserve Bank of India (RBI) Deputy Governor Shyamala Gopinath said here on Tuesday that it is closely monitoring the spiralling inflation, but would keep in mind the need to encourage growth before making changes to monetary policy.

    Addressing the members of the Bangalore Chamber of Industry and Commerce, Gopinath said: "RBI has already started the first phase of exit in its October policy, though primarily in terms of signalling the stance rather than affecting the liquidity conditions or the interest rate."

    "The evolving growth-inflation conditions will dictate the future course of actions from RBI," she added.

    According to Gopinath, rising food prices is a result of lower supplies and was responsible for stoking inflation rate.

    She said the main challenge before the country was to deal with the dip in food output.

    "Given this scenario, higher inflation could not be ruled out," she opined.

    "Since supply shocks take time to taper off, there is a risk that high inflation in essential commodities could affect inflation expectations over time and give rise to generalised inflation," Gopinath said.

    For the week ended on December 12, country's annual food inflation based on wholesale prices fell marginally to 18.65 per cent from 19.95 per cent.


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