RBI may go in for further tightening, says Rangarajan

The Reserve Bank of India (RBI) might take further monetary tightening measures to tame inflation, which stood at 8.23 per cent in January, the Prime Minister’s Economic Advisory Council said today. “RBI will have to take a view looking at the level of inflation. It is still uncomfortably high. Some action, continued action, (to tighten monetary policy) may be required,” PMEAC chairman C Rangarajan said.

His remarks came even as inflation , though down marginally from December, continued to be above eight per cent, a level where it had been since January 2010. RBI raised its short-term lending and borrowing rates by 25 basis points at its third quarterly review last month to tame inflationary pressure. The apex bank has also termed inflation as its topmost priority. Asked about the decline in inflation in January, Rangarajan said, “In some ways, it was expected. We can see inflation falling to seven per cent by March.” At the last month’s review, RBI had revised its inflation estimate to seven per cent by March-end, from the earlier 5.5 per cent.

Inflation declined marginally to 8.2 per cent in January from 8.43 per cent in the previous month, as prices of commodities like wheat, pulses and sugar eased, although essential items like onions and other vegetables continued to remain firm.

Besides food items, experts have also voiced concerns over the global crude prices, which, at $102 a barrel, have crossed a 28-month high on account of the political instability in West Asia, especially Egypt.