On eve of crucial RBI meet, Govt says inflation not alarming

Food inflation
New Delhi, June 15: A day before the Reserve Bank is expected to raise benchmark interest rates, the government today (June 15) said there is nothing alarming about inflation.

The overall inflation, as per the latest data, crossed 9 per cent for May against expectations. Food inflation too rose to a 2-month high of 9.01 per cent for the week ended May 28.

"There is nothing to be alarmed about the current inflation...the government is taking stock of the situation and will take appropriate steps if need be," new Cabinet Secretary Ajit Kumar Seth told PTI.

Seth, who paid a "courtesy call" to Agriculture Minister Sharad Pawar, said he would not like to comment on what RBI would do tomorrow in its mid-quarterly policy review.

"I cannot pre-judge what RBI is going to do at this point of time," he said.

Experts have predicted that RBI would raise key policy rates by at least 25 basis points tomorrow to curb price rise.

The Reserve Bank has hiked key policy rates nine times since March 2010 in its bid to tame inflation. Inflation continues to remain high despite RBI's raising lending (repo) and borrowing (reverse repo) rates.

The central bank yesterday said inflation would continue to face upward pressure in the months ahead, indicating that it could further raise key interest rates to check rising prices in its mid-quarterly policy review.

"Global commodity prices, particularly oil, and performance of the monsoon, are the key risk factors to inflation management in the months ahead," RBI Governor D Subbarao had said.


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