Reserve Bank Governor D. Subbarao on Friday called on Finance Minister Pranab Mukherjee here in the backdrop of intense speculation that the central bank might squeeze money supply in the wake of rise in prices of food items which is at a decade’s high.
Mr. Subbarao was with the Finance Minister for more than an hour. He also met Finance Secretary Ashok Chawla, Revenue Secretary P.V. Bhide, Expenditure Secretary Sushma Nath and other officials at the North Block.
Speaking to reporters after the meeting with Pranab Mukherjee, the RBI Governor did not go into specifics of what was discussed with Mr. Mukherjee and senior officials.
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“I came for the routine meeting. Of course, when I meet the Finance Minister, I talk about the macro economic situation,” he told the waiting mediapersons.
The RBI will come out with a 3rd quarter review on January 29.
When asked about the possibility of an imminent rate hike by RBI, Finance Secretary Chawla said, “No, no. Not at all.
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However, when queried further whether he would rule out an increase in interest rate at this point of time, he merely said, “I cannot say on that.”
Earlier in the day, Minister of State for Finance Namo Narain Meena said WPI in 30 essential items rose to 21.15 per cent in November from 17.91 per cent in the preceding month.
The rate of price rise in food items also soared to decade’s high of 19.95 per cent for the week ended December 5.
The fear of rate hike has weighed heavily on markets this week. Reports that Mr. Subbarao is meeting FM today augmented worries, sparking an onslaught of selling which pulled down the Sensex.