RBI keeps lending rate unchanged at 7.75%; says current inflation is too high
Updated: Dec 18, 2013 12:53:22pm
"The policy decision is a close one. Current inflation is too high," said the RBI Governor Raghuram Rajan, releasing the policy today.
“Growth continues to be below potential,” he added.
In its mid-quarter monetary policy meet today the apex bank left the repo rate unchanged at 7.75 per cent and Cash reserve Ratio (CRR) at 4 per cent.
However, the RBI also said that its reluctance to over-react was given the "wide bands of uncertainty" surrounding the outlook for inflation amid signs of sharply falling vegetable prices and "the weak state of the economy."
Still, the RBI said it would remain vigilant on inflation and that it would be ready to act even in between policy reviews should headline or core inflation not ease as expected, although in a "calibrated" manner.
The November WPI inflation touched 7.5 per cent due to higher food prices, while the November CPI inflation too came in at 11.2 per cent.
“We shouldn’t react to every reading of inflation if we believe it will come down,” Rajan said adding that the commitment to containing inflation should not be doubted.
The RBI had raised interest rates by a quarter percentage point at its previous reviews in September and October. No review was held in November. (KNN/SD)