RBI governor meets PM, FM ahead of policy review

Ahead of the monetary policy review, the Reserve Bank of India (RBI) Governor D Subbarao today met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee to discuss the prevailing macro-economic situation, including high inflation and possible steps to address it.

Subbarao met Singh in the morning and later called on Mukherjee, sources said.

Officially no detail was given about the meeting between Singh and Subbarao, but sources said they believed to have discussed the overall economic situation in the country and the possible impact of prevailing global crisis.

After meeting Mukherjee, Subbarao said that it was a standard practice for the RBI Governor to discuss the state of economy with the Finance Minister before review of the monetary policy.

"I came to review the macro-economic situation," he said.

The RBI policy review is scheduled on October 25.

The central bank has hiked interest rates by 350 basis points since March 2010 to deal with the persistent high inflation, including rising prices of food items.

The RBI and the government are confronted with fresh challenges of weakening rupee which puts further pressure on inflation.

Besides, slackening industrial growth leaves limited choices for the policy makers, especially in view of difficult global economic environment.

While the food inflation has touched a six month high of 10.6%, the overall rate of price rise measured on the basis of wholesale price index (WPI) is stubbornly close to double digit since December last year.