Pranab confident RBI will fix policy ‘suitably’

Ahead of the Reserve Bank of India's quarterly monetary policy announcement on Monday, finance minister Pranab Mukherjee today said he is confident that the central bank will adjust the monetary policy suitably to meet current economic concerns.

''Keeping in view all current factors, I am confident that RBI will adjust monetary policy as we are adjusting the fiscal policy,'' Mukherjee said at a banking and insurance seminar organised by the Associated Chambers of Commerce & Industry (Assocham).

The Reserve Bank is widely expected to cut policy rates on Monday, but by small margins as RBI does not have room for major cuts. D Subbarao, governor of RBI, has said this week that inflation is a more immediate concern than the slowdown in economic growth.

In his first public address after being nominated as the presidential candidate of the ruling United Progressive Alliance, Mukherjee listed slow growth, high fiscal and current account deficits, inflation and negative sentiments as challenges facing the economy.

He said the government is taking fiscal measures to ensure that the central finances remain strong in these "difficult times".

Mukherjee said India is as concerned as other countries about whether Greece will remain part of the Eurozone currency union, as the developments in Europe are impacting the value of rupee. The rupee has shed about 20 per cent against the dollar in the last one year.