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The Finance Minister, Mr Pranab Mukherjee, is hopeful that the RBI's latest 25 basis point hike in repo rate would help bring about a “more comfortable inflation situation earlier rather than later”.
He is also confident that the policy rate action would leave scope for economic growth to pick up in the second half of the current fiscal.
The 25 basis points hike in repo rate was consistent with the central bank's monetary stance for the first half of 2011-12 and the overall concerns of growth sustainability in the medium term, Mr Mukherjee said in a statement issued after the RBI's mid-quarterly review announcement.
The Finance Minister said that the headline inflation continues to be a matter of concern at over nine per cent over the last 12 months, with significant supply and demand side factors contributing to it.
There are also signs of growth being affected by monetary tightening in the recent data on the real economy, the statement added.
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