INDIA'S RBI HINTS AT CONTINUATION OF ACCOMMODATIVE STANCE

The Reserve Bank of India today indicated that it would continue with its accommodative policy stance as managing growth and inflation poses a big challenge for the central bank.

"Managing trade-off between supporting growth and reining in inflation expectations is a complex policy challenge," RBI said in its macro economic and monetary development report a day before the release of second quarter review of the monetary policy.

Prime Minister Manmohan Singh yesterday talking to reporters in Thailand said global economy has not recovered fully and hence the time was not right for withdrawing stimulus packages provided to the industry to combat the impact of meltdown.

"Emerging inflationary pressures may also persist and escalate further on account of the fading away of the base effect, cost push pressures," the central bank said while pointing out that its professional forecasters have lowered the economic growth rate projection for the current fiscal year to 6 per cent from 6.5 per cent.

The apex bank had earlier forecast 6 per cent growth rate with an upward bias. More recently, the Prime Minister Economic Council has projected 6.5 per cent expansion.

Referring to the inflationary concerns, RBI pointed out that supply side constraints in a limited number of commodities, led by food, have been driving current inflation pressures in the economy.

(PTI) cg

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