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India is well on track to meeting the central bank's inflation target of eight per cent by January 2015 and six per cent a year later, the RBI's Executive Director Deepak Mohanty said at a conference here this morning.
However, the Reserve Bank of India is unlikely to shift its focus from reining in prices until households' expectation of inflation falls, something which, Mohanty said, has not happened yet. He also said though the RBI had kept nominal rates sticky, real lending rates (after accounting for inflation) have remained low. Both factors make a rate cut in the RBI's monetary policy review in early December unlikely.
Low inflation is not an end in itself, Mohanty reiterated, and the central bank does intend to help the country on the path to sustainable growth. The bank's GDP growth expectation for the current fiscal year remains 5.5 per cent.
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