Subbarao meets Pranab ahead of policy

Ahead of the monetary review on Tuesday next, Reserve Bank of India (RBI) Governor D Subbarao today met Finance Minister Pranab Mukherjee and discussed the country's macroeconomic situation.

"Our policy review is scheduled for Tuesday, July 27. As is the standard practice, I've come to review the macroeconomic situation with the Finance Minister," Subbarao told reporters after the meeting Mukherjee in North Block.

With inflation in double-digits for five months in a row, the central bank is widely expected to further raise its short term lending and borrowing (repo and reverse repo) rates in its upcoming monetary review.

"What we will do, you will get to know on July 27," Subbarao said, refusing to share any details. The central bank has already raised its key policy rates by 25 basis points earlier this month to tame inflation.

Earlier in the day, the Prime Minister's Economic Advisory Council also called for tightening money supply to curb inflation. Council chairman C Rangarajan, however, said it is up to RBI to take strong action or "baby steps" to rein in inflation.

He said inflation is triggered by food inflation. Even after a decline, food inflation stood at 12.47 per cent for the week ended July 10.

Since January, RBI has started reversing its soft monetary policy began in September 2008 when global financial crisis deepened after the collapse of US financial major Lehman Brothers.