The government’s top economic managers on Monday dropped strong hints that the Reserve Bank may raise key policy rates to check spiralling inflation which has crossed the double-digit mark.
Such indications were given by Planning Commission Deputy Chairman Montek Singh Ahluwalia, Chairman of Prime Minister’s Economic Advisory Council C. Rangarajan and Finance Secretary Ashok Chawla.
Annual inflation, measured by movement of the wholesale prices, rose to a heady 10.16 per cent in May, as per the provisional figures released today. The final inflation figures for March too stood revised at 11.04 per cent from 9.90 per cent reported earlier.
“It (high inflation) is always a matter of concern,” Finance Secretary Ashok Chawla said.
Though the RBI is slated to review its monetary stance on July 27, it may step in earlier in view of the soaring prices, which are hurting the common man. Earlier, too, the RBI had intervened before the scheduled policy reviews and revised key short-term lending and borrowing rates.
Ahluwalia too opined that “The only reason to tighten monetary policy is that if you feel that inflation has gone too high.”
According to Rangarajan, “The picture is clear that inflationary pressures are now stronger. March figures are revised upwards. The manufacturing sector inflation is up and is not confined to food. So, some action would be called for by the RBI in terms of policy tightening... some action on the demand-side.”