RBI to take all steps to keep prices stable

14 March 2007

Mumbai: Speaking at an investor seminar in Mumbai today, Dr Rakesh Mohan, deputy governor, Reserve Bank of India, said the that the RBI would take all possible monetary measures to maintain price stability, and respond swiftly to bring down inflation.

Mohan said "Maintenance of macroeconomic stability and financial stability is important to us," and the RBI would focus on liquidity management, as a reasonable amount of cutting back of excess cash was needed to achieve desired monetary growth.

"We will take all possible monetary actions to maintain price stability and will respond swiftly to bring inflation down."

In early February wholesale prices, touched a two-year high of 6.73 per cent, and is currently hovering at 6.10 per cent, above RBI' target of between 5 and 5.5 per cent.

The government has repeatedly cited supply-side constraints for fuelling inflation particularly for farm products. India's GDP is slated to grow to an estimated 9.2 per cent in the current financial year, and at a similar rate in FY 2007-08 as well, the highest in nearly two decades.