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Here's how Rajan plans to fight inflation

November 15, 2013 17:40 IST

RupeeReserve Bank of India chief Raghuram Rajan said on Friday that no single data point or number will determine the central bank's next move on managing India's high inflation.

Rajan said that demand needs to be reduced without having severe effects on investment and supply.

"This is a balancing act, which requires the Reserve Bank to act firmly so that the economy is disinflating, even while allowing the weak economy more time than one would normally allow for it to reach a comfortable level of inflation," he said in a speech.

"The weak state of the economy, as well as the good Kharif (summer) and Rabi (winter) harvest, will generate disinflationary forces that will help, and we await data to see how these forces are playing out.

"No single data point or number will determine our next move," he said. The RBI at its last meeting raised its policy repo rate by 25 basis points to 7.75 percent citing persistent inflationary pressures.

Suvashree Dey Chowdhury in Mumbai
Source:
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