RBI may revise inflation projection

December 8th, 2011 - 9:57 pm ICT by IANS  

Kolkata, Dec 8 (IANS) Stating that it had already factored in rupee depreciation and soaring crude oil prices into its projection of 7 percent overall inflation by March next year, the Reserve Bank of India (RBI) Thursday said it will come out with an update in its mid-quarter policy review Dec 16.

“We have done the numbers…rupee has depreciated about by 14 percent or so since early August and certainly the depreciation of rupee adds to inflationary pressures. We will be coming out with the more definitive statement on this in our statement Dec 16,” RBI Governor D. Subbarao told newspersons here after a board meeting of the central bank.

“But as of now our understanding is some amount of rupee depreciation and a certain assessment of oil price has been built into our projection of 7 percent WPI (Wholesale Price Index) inflation in March 2012,” he added.

On whether the apex bank has intervened in the market to check the rupee fall, Subbarao said: “It is not possible for me to say what RBI has done or not done in the foreign exchange market…that you will know when we release the numbers. I believe we release the numbers with two months lag.”

The rupee fell to a record low of 52.73 per dollar last fortnight.

Most of rupee’s decline came since August this year, when downgrading of the US economy by Standard & Poor’s led to greater uncertainty and turmoil in the global economy.

There has been criticism from several quarters that the apex bank is dithering on reining in the rupee fall by market intervention.

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