RBI remains committed to reining in inflation

14 Oct 2011

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The Reserve Bank of India (RBI) governor D Subbarao has said RBI will stay committed to taming inflation even if this means some growth was to be sacrificed.

''When inflation is as high as 9.8 per cent, it is difficult to bring it down without compromising on growth," said Subir Gokarn, a deputy governor at the bank.

 Gokarn had earlier said that the RBI would change its monetary policy stance only if inflation eases and further rate increases would depend on the price rise situation.

"So we are trying to trade off at this time on bringing down inflation, even if that means bringing down growth by a few basis points,''

Inflation continues to stay at nearly twice that of the central bank's comfort levels – it has stayed above9 per cent for nine straight months now despite the central bank hiking policy rates a dozen times by a total 350 basis points (bps) since March 2010.

The market expects another rate increase by the RBI on 25 October, when it meets to review monetary policy. ''Whether we will be pausing the hikes or whether we will be continuing with hiking, it's not clear,'' Subbarao said, adding that he would ''consult experts and discuss internally'' and announce the decision at this month's policy review.

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