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With spike in food inflation, Dr C Rangarajan, Chairman of Economic Council to the Prime Minister today said he would not be surprised if the RBI hikes the rate by 25 basis points (bps) to contain it.
Replying to a question whether he expected another hike in the rates due to the increase in food inflation, Dr Rangarajan said, “I will not be surprised if the RBI raises the rate by 25 basis points”.
Driven by high prices of fruits, milk, meat, eggs, India’s food inflation crossed 17 per cent for the week—ended January 22.
Dr Rangarjan who was speaking on the sidelines of a book release function organised by the Southern India Mills Association, said the RBI would continue to act as long as there was a need to contain the rapid escalation in food prices.
He said food inflation was expected to decline.
With the good monsoon, he said, the situation is already improving; prices of fruits and vegetables have already started declining and by middle of February it would decline further.
He added the overall inflation would also come down to 7 per cent by March.
To another question on removing restrictions on FDI to attract more investments, he said the restrictions differed from sector to sector and the Government would examine what could be done over the issue.
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