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Containing inflation a challenge: RBI

Last Updated: Monday, August 31, 2009 - 13:57

New Delhi: With food price inflation in double digits, the Reserve Bank is faced with the daunting task of keeping inflation in check, the bank Deputy Governor K C Chakrabarty on Monday said.

Concerned over the rising food prices he said, "The food price inflation is already around 10 percent. Our key challenge is how to keep the inflationary pressure low."
Speaking at an event of the Institute of Banking, he dwelt on a range of issues from drought to interest rates to government borrowings and said the country would continue to grow at 6 percent-plus.

However, he pointed out that if the "drought affects the agriculture growth, it will partly affect the growth number".

On interest rates he ruled out any further cuts and said the central bank could even reverse its expansionary stance if the drought-induced inflationary prices go out of control.

"I don`t think today anybody is expecting interest rates to come down further," he said.
Admitting the huge government borrowing to have exerted some pressure on interest rates, which have "already gone up a little-bit," he said he expects interest rates to be stable as of now.

Bureau Report

First Published: Monday, August 31, 2009 - 13:57

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