New Delhi: Even as economists say high interest rates are choking the growth momentum in the country, Prime Minister’s Economic Advisory Council chairman C Rangarajan on Wednesday said the central bank should continue to focus on controlling rising prices. “According to latest (inflation) numbers, it is still above 9%. Therefore, concerns regarding inflation cannot be taken away from the monetary authorities,” he said on the sidelines of Delhi Economics Conclave. The inflation data released on Wednesday showed that the rate has declined marginally to 9.11% in November from 9.73% in the previous month. Both the government and RBI have pegged the year-end inflation at around 7%. RBI, which has raised interest rates 13 times since March 2010, to rein in inflation, is scheduled to review the monetary policy on Friday, December 16. In the last review, it had indicated that it may take a pause in rate hike in December if inflation situation improves. Industry has maintained that RBI’s tight monetary policy regime is hurting investments and industrial production. Asked if the central bank should intervene to arrest the slide of rupee against the US dollar, Rangarajan said India can do little to check the movement in the rupee, which is driven by external factors He added, “the stated policy of RBI is to prevent volatility in foreign exchange market. I think RBI will act but it is really a call of RBI and it will depend on what is happening on market.’’ He said behaviour of the rupee, which touched an all-time low of 53.75 vis-a-vis the US dollar on Wednesday, is a reflection of current account deficit and extent of capital flows. “If there is a temporary mismatch, this will lead to pressure on capital flows, but if capital flows pick up, then what we are now seeing, can also get reversed,” he added.
FE
