Mid-Quarter Monetary Policy Review: March 2011
-Announced on the 17th March 2011 by Dr. D. Subbarao, Governor, Reserve Bank of India
To sum up, the underlying inflationary pressures have accentuated, even as risks to growth are emerging. Rising global commodity prices, particularly oil, are a major contributor to both developments. As domestic fuel prices are yet to adjust fully to global prices, risks to inflation remain clearly on the upside, reinforced by the persistence of demand-side pressures as reflected in non-food manufacturing inflation. The Union Budget for 2011-12 indicates some easing of demand pressures from the fiscal side, thus creating space for private investment, but this will materialise only if commitments to contain subsidies are adhered to. Measures to increase agricultural productivity, particularly in items facing structural supply-demand imbalances, will contribute to easing food inflation over time.
The policy action in this Review is expected to:
continue to rein in demand-side inflationary pressures while minimising risks to growth; and
manage inflationary expectations and contain the spillover of food and commodity prices into more generalised inflation.
Based on the current and evolving growth and inflation scenario, the Reserve Bank is likely to persist with the current anti-inflationary stance.
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