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The Finance Minister, Mr Pranab Mukherje, today refused to be drawn on what appropriate monetary action the Reserve Bank of India could take at the current situation to tame inflation. The central bank is due to review the Monetary Policy on January 25, and is widely expected to raise policy rates.
“The RBI always keeps the situation under review. Whenever the appropriate adjustment of crucial rates is called for in the larger interest of the economy, including price stabilisation, the RBI takes appropriate policy action in consultation with the Government,” Mr Mukherjee said at a press conference, sidestepping a query on whether raising interest rates at this moment to tame inflation would hurt India's growth prospects.
Economy watchers expect the RBI to in the upcoming review meeting to move away from its earlier approach of undertaking “baby steps”.
krsrivats@thehindu.co.in
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