Outgoing Governor of Reserve Bank of India, Raghuram Rajan, said he has no doubt that inflation, which crossed the 6 per cent mark in July, will slow in the coming months. “We finally have a framework that commits us to low and stable inflation. Yes, July’s inflation reading was a high 6.07 per cent, but I have no doubt that inflation will fall in the months ahead,” Mr. Rajan said in a speech to the Foreign Exchange Dealers Association of India (FEDAI).
Consumer price index-based inflation accelerated at a faster-than-expected pace to 6.07 per cent in July, mainly driven by food prices, as compared with 5.77 per cent in June. RBI had kept interest rates unchanged in the August policy due to high inflation.
“The key point is that market participants know that the Monetary Policy Committee has to maintain low and stable inflation, certainly over the next five years for which its remit has been set, and it will do what it takes,” Mr. Rajan, who demits office in early September, said.
