Monetary policy depends on Dec inflation: Rangarajan

Exerting that food prices are still at high levels, the Prime Minister's Economic Panel today said that the Reserve Bank's decision to tighten monetary policy further will depend on inflation (behaviour) in the month of December.

"Reserve Bank of India (RBI) will decide (on monetary action) depending on behaviour of inflation in the month of December," PM Economic Advisory Council Chairman C Rangarajan told reporters here.

He further said that he expected wholesale price inflation to fall between 5.5-6 per cent by March 2011 from 8.62 per cent in September this year.

Rangarajan also said that there could be decline in food prices in the coming month.

To tame inflation, RBI had earlier this month increased its short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points to 6.25 per cent and 5.25 per cent, respectively. This was the sixth time in this fiscal that the apex bank had raised key lending and borrowing rates to cool inflationary pressures in the economy.