Mumbai, Jan 17 (PTI) RBI Governor D Subbarao today saidthe country was facing surging inflation and that monetarypolicy needed to be calibrated to manage it as well as supportgrowth, a clear hint that drastic measures are needed to reinin soaring prices.
"A lot of other countries are still flirting withdeflation ... still concerned that they might have deflation.
On the other hand, we are having a surging inflation," theGovernor told the students of the Indira Gandhi Institute ofDevelopment Research (IGIDR)on their convocation here today.
"For the Reserve Bank the challenge is to calibratemonetary policy taking into account the demands of inflationmanagement and the demand of supportive recovery," he said.
His comments come a week before the central bank in itswidely-anticipated third quarter monetary policy review onJanuary 25, is anticipated to raise the key policy rates by atleast 25 basis points.
"When I meet other central bankers they tell me whydon''t you give us a bit of your inflation so that our growthwill be faster. That''s how desperately they want someinflation and how desperate we are to control our owninflation," the Governor said.
He, however, added there was no template for monetarypolicy management or inflation management.
Headline inflation, based on wholesale price index, wasspiked by rising food prices and jumped to 8.43 per cent inDecember last year from 7.48 per cent in November.
The RBI had last year upped its repo and reverse reporates (short-term lending and borrowing rates) six timesto 6.25 per cent and 5.25 per cent, respectively, to normalisea monetary policy that was on expansion mode since the onsetof the global financial meltdown in late 2007.
While noting that there has been broad-based recoveryacross the globe, Subbarao said, "though we recovered fasterfrom the crisis, inflation also caught up with us sooner thanothers. .