News: 'Indian inflation can still be contained'
(PTI 02/07/2006) Mumbai - The Reserve Bank of India (RBI) today said as per current indications it was still possible to contain inflation within the 5 to 5.5% range, even as price stability required greater vigilance.
"As per our assessment as of now, it should still be possible to contain the inflation within 5 to 5.5% while greater vigilance and attention are required to ensure price stability," RBI Governor Y V Reddy said on the sidelines of a function organised by Banking Codes and Standards Board of India (BCSBI).
In the last few weeks, higher prices of pulses, fruits, vegetables and some fuels have driven up inflation in the economy. The figures stood at a year high at 5.44% for week-ended June 17, up by 20 basis points as against 5.24% posted a week ago.
The RBI governor, however, stressed that one should be 'more sensitive' to inflation perceptions.
"Inflation perceptions tend to harden and get embedded into inflation expectations if they last too long," Reddy said.
Asked on a possible RBI intervention if inflation crosses the 5.5% mark, Reddy said instead of reacting on a month to month basis, the approach would be forward looking.
On the recent rate hike by US Fed, he said while the RBI cannot be out of sync with global interest rates, it was not governed on a rate to rate basis with other central banks.
"As per our assessment as of now, it should still be possible to contain the inflation within 5 to 5.5% while greater vigilance and attention are required to ensure price stability," RBI Governor Y V Reddy said on the sidelines of a function organised by Banking Codes and Standards Board of India (BCSBI).
In the last few weeks, higher prices of pulses, fruits, vegetables and some fuels have driven up inflation in the economy. The figures stood at a year high at 5.44% for week-ended June 17, up by 20 basis points as against 5.24% posted a week ago.
The RBI governor, however, stressed that one should be 'more sensitive' to inflation perceptions.
"Inflation perceptions tend to harden and get embedded into inflation expectations if they last too long," Reddy said.
Asked on a possible RBI intervention if inflation crosses the 5.5% mark, Reddy said instead of reacting on a month to month basis, the approach would be forward looking.
On the recent rate hike by US Fed, he said while the RBI cannot be out of sync with global interest rates, it was not governed on a rate to rate basis with other central banks.
posted by InCar Group Press Room at 21:43
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