Published on Thu, Jul 29, 2010 at 14:12 | Source : Reuters
Updated at Thu, Jul 29, 2010 at 14:42
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RBI official: Need aggressive policy action
A Reserve Bank of India official said current policy rates will not tame inflation and aggressive action is needed, two days after it raised rates more sharply than expected and adopted a hawkish tone.
Various government arms have different inflation forecasts, ranging from Prime Minister Manmohan Singh's prediction of 6% by December to the 7% to 8% projected for the period by his economic advisers.
They also differ on their reading of the causes of inflation. The government blames high food prices and says a good monsoon will cool prices, while the RBI says demand-side effects would keep inflationary pressures intact.
High prices are a political headache in a country where hundreds of millions live on less than USD 1.25 a day.
Massive street protests have been mirrored in parliament, where the opposition parties have stalled proceedings demanding a vote against the Congress-led government for failing to control inflation.
