The Reserve Bank of India will only consider easing monetary policy if inflation falls below 7 percent, its governor said on Wednesday, a day after signalling that a 13th interest rate hike in 19 months was likely to be its last. “Inflation has to come down below 7 percent before we contemplate reversing our policy stance,” Duvvuri Subbarao told a conference call with analysts. The central bank lifted its policy lending rate, the repo rate, by 25 basis points to 8.5 percent on Tuesday, continuing a fight against inflation that has put it at odds with some global peers more concerned about weak growth. The Reserve Bank of India expects annual inflation to fall to 7 percent by March, and said during its second-quarter review this week that further rate hikes were unlikely if price pressures moderate in line with the bank’s projections. Headline inflation has been stubbornly high in Asia’s third-largest economy, despite the RBI’s tightening cycle that has seen interest rates rise 375 basis points since March 2010. Wholesale annual inflation in India was 9.72 percent in September, its 10th straight month above 9 percent and the highest among the BRIC grouping that also includes Brazil, Russia and China.
Firstpost
