With both retail and wholesale inflation high, the expectation is that the RBI will raise policy rates further to counter rising prices.
Inflation as measured by the wholesale price index was at an eight-month high of 7%, while retail inflation stood at a seven-month high of 10.09% in October.
In the past two consecutive policies, the RBI raised the repo rate by 0.25 per cent each due to the worsening price situation. The next policy is scheduled on December 18.
Meanwhile, Rajan called for forceful action to counter the atmosphere of cynicism, which has slowed down the decision-making process, and to tap growth opportunities.
“That cynicism does not just permeate the foreign press and their audiences, but also infects our domestic debate. Every policy is greeted with suspicion and scrutinised for evidence of malfeasance,” he said while addressing BANCON 2013 in Mumbai.
Rajan said measures will be announced to incentivise banks for early detection of bad loans and better resolution of non-performing assets.