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


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

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