Reserve Bank engaged in keeping inflation low
31 Aug 2009, 1635 Hrs

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New Delhi, Aug. 31 Reserve Bank of India's Deputy Governor K C Chakrabarty on Monday said the bank is faced with the challenging task of keeping inflation in check, when food price inflation has already reached around 10 percent.

"The food price inflation is already around 10 percent. Our key challenge is how to keep the inflationary pressure low," he said while speaking at an event of the Institute of Banking.

He dwelt on a range of issues from drought to interest rates to government borrowings, and said the country would continue to grow at 6 percent-plus.

However, he pointed out that if the "drought affects the agriculture growth, it will partly affect the growth number".

Commenting on interest rates, he ruled out any further cuts and said the central bank could even reverse its expansionary stance if the drought-induced inflationary prices go out of control.

"I don't think today anybody is expecting interest rates to come down further," he said.

Admitting the huge government borrowing to have exerted some pressure on interest rates, which have "already gone up a little-bit," he said he expects interest rates to be stable as of now. (ANI)

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