RBI may act sooner than 27 July, says deputy governor
14 Jun 2010
The recent spike in inflation levels is likely to prompt the Reserve Bank of India (RBI) into monetary action before the scheduled 27 July policy review, deputy governor K C Chakrabarty said today.
The wholesale price-based inflation rate in India accelerated in May to a 2-digit level at 10.16 per cent, giving no much leeway for the central bank, which is expected to hold the price line and assist economic development.
Finance minister Pranab Mukherjee, however, cautioned the RBI against any immediate rate hike as it may hurt a nascent recovery.
Mukherjee's comments were backed by industry apprehensions of the adverse impact of any tightening of monetary policy by the RBI to rein in the wayward inflation.
Industry chambers want the RBI to maintain adequate liquidity to aid growth.
FICCI secretary general Amit Mitra allayed fears of any further increase in inflation saying that the current spurt is due to the lean season for agricultural supplies.
