News Column

Indian central bank to focus on fighting inflation

June 17, 2014

Bloomberg News

Mumbai: Reserve Bank of India (RBI) governor Raghuram Rajan said he'll focus on fighting inflation in coming months, in a sign that the key interest rate may stay elevated.

"For the next few quarters, we will be engaged in fighting inflation," Rajan said before he began a speech at a banking conference in Mumbai. "Food prices have had an effect in the last couple of months and the hope is that with appropriate food management these prices will come down."

Rajan held the repurchase rate at 8 per cent on June 3 and said a quicker than anticipated slowdown in inflation would allow room for policy easing. A report on Monday showed wholesale prices rose at the fastest pace in five months in May, underscoring the challenge of restraining inflationary pressures as a potentially weak monsoon looms over crop output.

Rajan said the Reserve Bank of India is also watching how violence unfolds in Iraq and its impact on oil prices, while adding that India has sufficient foreign exchange reserves.

Brent crude rose to a nine-month high on June 13, threatening to boost India's import bill as the nation ships in about 80 per cent of its oil.

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Source: Times of Oman

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