“RBI’s main objective remains price stability, financial stability and maintenance of high growth through adequate provision of credit. We will use all monetary instruments as and when necessary (to meet the objective),” Deputy Governor Rakesh Mohan said at a business conference here.

Inflation stood at 3.11 per cent for the week ended November 3, compared to 2.97 per cent a week ago, mainly due to rise in prices of food articles, petroleum products and manufactured items.  Mr Mohan said Food & Agriculture Organisation (FAO) of the United Nations has predicted that food prices would be rising at a higher rate in the next 5-10 years than in the past, adversely impacting those economies that have higher weight of food items in price levels.

In India, food items account for 57 per cent in Consumer Price Index and 26.94 per cent (primary and manufactured products) in the Wholesale Price Index that is used to measure inflation. Referring to rising crude oil prices, which crossed $99 a barrel on Wednesday, Mr Mohan said the apex bank would maintain its policy views expressed in the mid-term monetary review on high oil and food prices.

Cool down credit

Monetary measures by RBI, which last month hiked the percentage of depositors money that banks should keep in reserve, have helped cool down credit offtake.

He said RBI will move cash reserve ratio, both upward and downward, depending upon the situation. “We are ready to use all instruments — money supply situation — MSS (used to suck out liquidity through sale, purchase of government securities), liquidity adjustment facility and cash reserve ratio — depending on the situation. We will do whatever is necessary.”