Subbarao expects inflation to trend lower in January-March

KOLKATA Thu Dec 6, 2012 4:58pm IST

Reserve Bank of India's Governor Duvvuri Subbarao speaks during a meeting with bankers before unveiling the monetary policy review at the head office in Mumbai April 21, 2009. REUTERS/Punit Paranjpe/Files

Reserve Bank of India's Governor Duvvuri Subbarao speaks during a meeting with bankers before unveiling the monetary policy review at the head office in Mumbai April 21, 2009.

Credit: Reuters/Punit Paranjpe/Files

Related Topics

KOLKATA (Reuters) - India's inflation is expected to trend lower during January-March, Reserve Bank of India Governor Duvvuri Subbarao said on Thursday, a month after he had indicated the central bank might ease monetary policy as early as January.

"It (inflation) has come down from its peak, but at 7.50 percent, inflation is still high," he told reporters after the RBI's board meeting in Kolkata.

"We are expecting that inflation will trend down starting the fourth quarter of this fiscal year. As we go into our mid-quarter policy on December 18 and the quarterly policy on January 29, we will take into account the growth-inflation trajectory and calibrate our monetary policy accordingly."

The headline inflation rate, based on the wholesale price index, rose an annual 7.45 percent in October, the slowest pace in February.

The RBI projects WPI at 7.5 percent at March-end, after revising the projection upwards twice earlier this year.

The RBI, which was a hawkish outlier long after many central banks began loosening policy, has refrained from lowering rates following sticky and elevated inflation since the April rate cut despite slowing growth.

However, pressure from government and industry bodies has mounted over the last few months to cut policy rates due to the sharp slowdown in economic growth.

India's services sector, which makes up nearly 60 percent of economic output, grew at its weakest pace in over a year in November, an HSBC services Purchasing Managers' Index, showed on Wednesday.

In the October review of the monetary policy, Subbarao said there was a "reasonable likelihood" of further easing in the January-March quarter.

(Reporting by Shamik Paul, writing by Neha Dasgupta; Editing by Jonathan Thatcher)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage