The Reserve Bank of India (RBI) today said the Rs 3.14 per litre hike in petrol price, announced yesterday, will further fuel inflation, which is nearing 10 per cent. "This (petrol price hike) will have a direct impact of seven basis points to WPI inflation, in addition to indirect impact with a lag," the RBI said in its mid-quarterly review of monetary policy. Overall inflation in August rose to 9.78 per cent, which is much higher than the RBI's comfort level of 5-6 per cent. "In the current scenario, with the likelihood of inflation remaining high for the next few months, rising inflationary expectations remain a key risk," the RBI said after hiking key interest rates by 25 basis points. The central bank further said the current level of high inflation makes it imperative to continue with the anti-inflationary stance and tight monetary policy.
IE
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