Subbarao meets Pranab to discuss inflation, say sources

RBI Governor D. Subbarao met Finance Minister Pranab Mukherjee on Saturday and is believed to have discussed the inflation scenario faced in the country, a few days after the central bank hiked short—term key rates to rein in inflationary pressures.

Sources said the Finance Minister wanted a briefing on the inflation situation and the RBI Governor conveyed his thoughts on the same.

The meeting took place at a time when the opposition is attacking the government on price rise.

On Tuesday, RBI released its monetary review, raising short—term borrowing (reverse repo) rate by 50 basis points and lending (repo) rate by 25 basis points to control demand that will ultimately bring down inflation.

RBI also upped its inflation projection to six per cent by this fiscal end from 5.5 per cent estimated earlier.

Inflation has been in double digits for the five consecutive months till June.

Meanwhile, for the first time this year, food inflation fell to single digit at 9.67 per cent during the week ended July 17, as vegetables, especially potatoes and onions turned cheaper.