RBI will take right action to stablise prices: Pranab

New Delhi, Jan 14 (PTI) Amid expectations that RBI willhike policy rates later this month to tame high inflation,Finance Minister Pranab Mukherjee today said the central bankwill take appropriate monetary action to stabilise prices.

"Whenever the appropriate adjustment of the crucialrates is called for in the larger interest of the economy,including the price stabilistion, the RBI takes appropriatepolicy in consultation with the government," Mukherjee toldreporters.

He was addressing a joint a press conference with WorldBank Group President Robert Zoellick here.

Mukherjee said the Reserve Bank of India (RBI) alwayskeeps the economic situation under review.

The RBI is widely expected to raise short-term lendingand borrowing rates -- repo and reverse repo -- in its policyreview on January 25 to tame inflation, particularly foodinflation.

Expensive food items pushed overall inflation to 8.43per cent in December, but experts say the rate of price risewill come down now since the country has seen the peak of foodprices.

On inflation in India, Zoeillic said it is mainly due tosupply side constraints.

"My own sense in the case of the Indian economy is thatsome of the inflationary pressures are more likely a functionof some of the bottleneck on the supply side than they arefrom the demand side," he said.

Mukherjee would have pre-Budget interactions with statecounterparts on Wednesday, where the issue of inflation wouldalso be discussed.

He has also written letters to states asking them toremove supply bottlenecks in food products.

RBI raised short term rates six times last year to checkinflation before pressing a pause button in December.