Kolkata: Reserve Bank Governor D Subbarao Thursday hinted at easy monetary regime in the coming days, citing steep moderation in growth and expressing optimism that inflation will cool off from the next quarter.
"We are expecting that inflation will trend down starting the fourth quarter. As we go into our mid-quarter policy on December 18 and the quarterly policy on January 29, we will take into account the growth-inflation trajectory and calibrate our monetary policy accordingly," he told reporters after the central board meeting of RBI here.
He, however, said 7.5 percent inflation is still high, though it has come down from its peak.
He further said: "Growth has moderated certainly. Growth has come down from 8.5 percent and 6.5 percent in the last two years respectively to 5.5 percent and 5.3 percent (in the last two quarters)."
RBI is always trying to manage the balance between growth and inflation, he said, adding that fall in growth to 5.3 percent in the last quarter is a steep moderation.
The headline inflation was 7.45 percent in October.
After two revisions, the RBI had projected the year-end headline inflation at 7.5 percent. In the beginning of the year, it had pegged inflation at 6.5 percent.
At the last credit policy announcement on October 30, RBI had left the key rates unchanged at 8 percent. Expressing disappointment, Finance Minister P Chidambaram had said that if the government had to walk alone on the growth path it would do so.
In the October monetary policy review, Subbarao had also said that "there is a reasonable likelihood of further easing in the January-March quarter."
While growth has taken a massive beating, inflation is still much above the RBI's comfort level of 5 percent, despite 13 successive rate hikes between March 2010 and October 2011.