Monetary tightening having impact;inflation will moderate: RBI

"Food picture remains a matter of some concern. Despite numbers coming down, it is still high. We do expect the numbers to come down in the next few months," RBI Deputy Governor Subir Gokarn told reporters.

"Impact of good monsoon on total picture has not been as strong as expected," said RBI deputy chief, who earlier delivered a key note address at 5th National Conference organised by the Jaipuria Institute of Management on banking and financial inclusion.

In fact, torrential rains have damaged the onion crop in parts of Maharashtra, leading to about 10 per cent rise in the vegetable just in a week ended October 30.

While overall inflation inched up marginally to 8.62 per cent in September, food inflation stood at a high of 12.30 per cent for the week ended October 30, despite some moderation.

The overall inflation figure for October is scheduled to be released tomorrow.
For the sixth time since January, RBI raised the key short-term lending (repo) and borrowing (reverse-repo) rates by 25 basis points to 6.25 per cent and 5.25 per cent, respectively at its mid-year credit policy review this month.

The monetary tightening, Gokarn said, was having its impact on inflation of the manufactured products.

"We started monetary tightening in January. Rate of inflation in manufacturing has peaked around July-August, but moderated later. In that sense monetary policy is having an impact," he added.

In mid-term review, RBI had said the monetary policy is aimed at conditioning and containing inflation perception in the 4-4.5 per cent range, in line with the medium-term objective of 3 per cent inflation.

It, however, pegged inflation at 5.5 per cent by the end of this fiscal.