RBI may take "early action" to check rising food prices: PMEAC

Last Updated: Friday, December 11, 2009 - 22:10

Chennai: The Reserve Bank may take "some
early action" if rising food prices do not ease in the coming
weeks, PMEAC Chairman C Rangarajan said here today.

"One was expecting some decline in prices particularly
during November and December. There may be some seasonal
decline in December. If it is not happening then there may be
some early action on the part of Reserve Bank," Rangarajan
told reporters here.

Early this month, Rangarajan had said RBI may start
sucking out money from the system to combat inflation
depending on how food prices move in December.

The annual rate of food inflation rose to 19.05 per cent
for the week ended November 28.

Rangarajan said, "It is true that (food inflation) is due
to the supply-side issue. But there is also serious shortage
of food. We must ensure that the overall monetary growth and
demand is under control."

To that extent, he said the monetary policy had a role to
play. But, by and large, efforts must be made to ensure the
supply or the stocks also get increased.

"If inflationary pressure persists for a long time it can
fuel inflationary expectations and monetary policy will have
to take a nuanced view on this," RBI governor had said this
week.

PTI



First Published: Friday, December 11, 2009 - 22:10

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