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Consumer inflation to ease in next two months: Raghuram Rajan

January 31, 2014 10:51 IST

India's consumer inflation should ease in the next two months, and will fall to 8 per cent by the end of the year, Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview with TV news channel CNN-IBN.

The comments came after the RBI unexpectedly raised interest rates by a quarter percentage point on Tuesday, marking its third hike in five months.

The consumer price index eased to a three-month low of 9.87 per cent in December. A central bank panel last week had recommended bringing down the retail inflation gauge to below 8 per cent by January 2015.

"There is some disinflation in the system. What was 9.87 is going to come down further next month, and probably a little further into March," Rajan told CNN-IBN.

"We are setting rates at a level that we think is consistent with that disinflation for us to get some bite and for the inflation in the system to come down to about 8 per cent at the end of the year."

Rafael Nam and Neha Dasgupta in Mumbai
Source:
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