Rajan keen to work with new govt to tame inflation

Reserve Bank of India (RBI) Governor Raghuram Rajan said on Friday he expected to join hands with the country's new government to bring down high inflation.

Rajan, speaking at a seminar in Tokyo, said the new government's plan to curb food inflation seems sensible and that he expected the public's inflation expectations to fall in the future.

Indian bond yields fell on Friday after Rajan's remarks, showing the level of concern about high inflation and investors' anticipation that the RBI will continue efforts to stabilise the economy.

"There is a sense of conviction about our plan to bring inflation down to 8 percent this year and 6 percent next year," Rajan said. "This information has gotten out to the public. The public's inflation expectations have fallen and I think expectations will fall further in the future."

The benchmark 10-year bond yield fell 4 basis points to 8.61 per cent by 0429 GMT following the comments.

Since Rajan took the helm of the RBI in September, the RBI has raised interest rates three times by a total of three-quarters of a percentage point in an attempt to curb persistently high inflation.