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

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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