D Subbarao on Friday took charge as the governor of Reserve Bank of India [Get Quote] from Y V Reddy and set for himself the immediate task of containing inflation, which is hovering above the 12 per cent mark despite moderation in the past two weeks.

"The immediate priority for me as the Governor of RBI will be to manage inflation and anchor inflationary expectations," Subbarao told reporters in Mumbai.

• All you wanted to know about the new RBI Governor

He said the priority in short-to-medium term will be to pursue financial sector reforms in the context of financial and price stability.

Inflation eased to 12.34 per cent during the week ended August 23 due to fall in food prices from 12.40 per cent a week earlier.

• The man who would be the next RBI Governor

However, the RBI yesterday indicated that there will be no softening of its hawkish monetary stance to contain inflation as volatile food and energy prices remain a challenge.

"It is critical at the prevailing juncture to demonstrate on a continuing basis a determination to act decisively, effectively and swiftly to curb any signs of adverse developments in regard to inflation expectations," the RBI had said in its report on currency and finance.

The RBI has been tightening money supply to contain inflation. It raised short-term lending rate repo five times and the mandatory requirement for banks to keep cash with the central bank 13 times since January 2007.Subbarao, who relinquished the post of finance secretary, also appreciated the role of Reddy as his predecessor. Reddy had earlier this week said that he will settle down in Hyderabad and may take up the job of teaching.