FM hails key policy rates hike

“It (RBI decision to raisekey policy rates) is in right direction as inflationary pressures are still there in the economy,” he said. “Inflationary pressure is still there in the system. The focus should be ideally to contain inflationary pressure,” Mukherjee said.

He said the adjustment made by the RBI in the repo (short term lending) and reverse repo (short term borrowing) would help to suck out the additional liquidity in the monetary market, which is putting pressure on the system. Sucking out of excessive liquidity in the market helps in containing inflationary expectation.

Currently overall inflation is standing at 8.5 per cent under the new series of Wholesale Price Index (WPI) after remaining in double digit figure for several months under the old index. Food inflation has already crossed 15 per cent for the week ended September four.  As per RBI the comfort level of inflation should be in the range of 4 to 5 per cent.