Don't take soft global commodity prices for granted: RBI governor

Soft global commodity prices cannot be taken for granted, according to Reserve Bank of India governor Duvvuri Subbarao.

Speaking today in Ahmedabad, Subbarao also said the current account deficit, which hit a record high 6.7 per cent of GDP in the December quarter on heavy oil and gold imports, would be a key factor in monetary policy decisions, Reuters reported.

He also added that the high current account deficit was weakening the rupee. The RBI would consider macro economic factors and "more importantly" the current account deficit for policy decisions, Subbarao said

Oil prices were down to $102 a barrel today and were heading for a third straight month of losses amid a tepid global demand outlook and abundant supplies in the US.

He also pointed out retail inflation was still high. Annual consumer price inflation slowed for the second straight month in April to 9.39 per cent, though it continued to rule higher than April's headline inflation of 4.89 per cent.

He added that the bad loan situation at lenders was "disturbing" pointing out though that it would not have a major impact on Basel III rules for capital adequacy.