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Inflation to remain under control: RBI

Written by: Staff

Mumbai, Apr 18 (UNI) Reserve Bank of India (RBI) Governor Y V Reddy today expressed confidence that inflation would remain under control and that the apex bank would contain inflation through policy measures this fiscal.

He, however, warned that the domestic price line could get impacted because of rising global oil prices.

''We are confident about containing inflation... We are worried about global oil prices...RBI will manage risks as they evolve,'' Dr Reddy told reporters after announcing the bank's annual credit policy for 2006-07.

The Reserve Bank has forecast inflation to be in the range of 5-5.5 per cent this fiscal, the same as last year.

Explaining the reasons behind the policy's move to keep key interest rates unchanged, he said the measure was aimed at bringing credit growth to a more sustainable level.

''This is a pre-emptive action. The interest rate structure will be assessed at the time of the quarterly credit review in July,'' he said.

RBI has assured appropriate liquidity for legitimate credit requirements, consistent with price and financial stability.

Asked about raising of provisioning for standard advances for home loans beyond Rs 20 lakh to one per cent, Dr. Reddy said that this move was in line with the Narasimham Committee recommendations.

He said the apex bank's policy was aimed at improving credit quality, besides leading to quantum jump in financial sevices penetration.


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