"Inflation risk...persists.The policy choices have become more complex. In this backdrop, the monetary policy trajectory will need to be guided by the emerging growth- inflation dynamics even as transmission of the past actions is still unfolding," RBI said in its review released on the eve of mid-year monetary policy announcement on Tuesday.
.Though the risk to growth is becoming visible, the challenge of bringing down inflation to an acceptable level on a sustainable basis remains significant, it further said. On account of various global and domestic factors, the RBI said, "growth in 2011-12 is likely to moderate slightly from that projected earlier".
The RBI had projected the economic growth, or GDP expansion, for the current fiscal at 8 per cent, down from 8.5 per cent in 2010-11. The Reserve Bank of India (RBI) has raised interest rates by 350 basis points since March, 2010 in its bid to contain inflation, which has remained near double-digit. The rate of price rise was 9.78 per cent in August, while food inflation was 10.6 per cent for the week ended October 8.