Wholesale price-based inflation that jumped to 6.46 percent in September, is likely to remain around the same level in the second half of the current financial year, the Reserve Bank of India (RBI) said Monday.
In a note released ahead of the second quarter review of monetary policy 2013-14, the RBI said the persistent high consumer price-based inflation remained a concern.
“WPI inflation is ruling above the Reserve Bank’s comfort level and may remain range-bound around the current level during second half of 2013-14. Moreover, the persistence of high CPI inflation remains a concern,” the central bank said.
On growth, the RBI said a “modest” improvement was expected in the second half, on the back of a rebound in agriculture and an improvement in exports.
“However, a fuller recovery is likely to start taking shape towards the end of the fiscal year on the back of current steps to clear impediments that were stalling projects,” it said.
The RBI is scheduled to announce the quarterly review of the monetary policy Tuesday.
In the note released, a day ahead of the policy review announcement, the RBI said it would try to address the concern over persistent high inflation and low growth.
“Monetary policy faces an unenviable task of anchoring inflation expectations, amid tepid growth and weak business confidence. It is, therefore, important to craft policy responses so that growth concerns are addressed in an environment of stable prices,” it said.
“With the normalisation of exceptional liquidity measures under way, incremental calibration of monetary policy will be shaped by changes in the growth-inflation balance, keeping overall macroeconomic stability in consideration,” the RBI said.
“For supporting growth, complementary action aimed at productivity enhancement, structural reforms and quick project implementation will be needed,” the note added.