RBI intends to bring CPI inflation down to 8% by January 2015

RBI intends to bring CPI inflation down to 8% by January 2015

The Reserve bank of India (RBI) intends to drag Consumer Price Index (CPI) inflation down to 8 per cent by January 2015 and further down to 6 per cent by January 2016, Governor Raghuram Rajan announced on Wednesday.

Mr. Rajan said that the central bank was adopting the Patel Committee's suggestion that the focus should be on CPI inflation rather than WPI (Wholesale Price Index) inflation. He stressed that the Patel Committee's suggestion for cutting inflation to 6 per cent was achievable without extreme hardship.

He added that ensuring monetary stability was the best way to foster sustainable growth, other than developing the financial sector.

Speaking on the topic, he said, "We believe the best way we can foster sustainable growth in the current situation ., is through monetary stability-by bringing down inflation over a reasonable period of time. More specifically, we intend to bring CPI inflation down to 8% by January 2015 and 6% by January 2016."

Mr. Rajan was speaking at annual conference of the Fixed Income Money Market and Derivatives Association of India-Primary Dealers Association.

After taking over as the governor of India's central bank last year, Mr. Rajan has hiked the repo rate by 75 basis points to 8.00 per cent to curb inflation. In November last year, the country's CPI-based inflation soared to a record high of 11.16 per cent; while WPI-based inflation jumped to 7.52 per cent. However in January this year, the two inflation measures slipped to 8.79 per cent and 5.05 per cent, respectively.

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