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01-05-2010, 01:50 AM #1
Reserve Bank Of India (RBI) Advocates For Growth Before Making Any Change In Monetary
India’s apex bank The Reserve Bank of India (RBI) has advocated for maintaining growth before making any changes to monetary policy. This was communicated by a central bank official recently in a meeting.
"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," said deputy governor Shyamala Gopinath in Bangalore.
In an address to the Bangalore Chamber of Industry and Commerce, the governor said, "The evolving growth-inflation conditions will dictate the future course of actions from RBI."
According to her, the major factor that is responsible for a high rate of inflation is rising food prices. She also attributed the rise due to the dip in food production throughout the country. She also warned that, the sharp increase in the inflation could be more upward in the coming days.
"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," she told.
India's annual food inflation based on wholesale prices fell marginally to 18.65% from 19.95% for the week ended Dec 12. But, the prices of the essential commodities soared to new high over the months.