The Reserve Bank of India (RBI) governor Raghuram Rajan said on Thursday the central bank has a neutral stance on interest rates for now, but it is still worried about high inflation, even when taking out volatile food prices.
"At this point we are neutral, we will see how things develop," Rajan said on the sidelines of a conference in Frankfurt.
Rajan surprised markets by hiking repo rate by 0.25 percentage points in mid-quarter review of monetary policy on Friday last week.
He said that higher food prices are not the only driver of inflation. "Unfortunately, there is still some inflation when you strip out the effects of food and energy. Therefore, it is not just food, it's other factors also that are driving inflation," he said.
"CPI core (inflation) is about 8.2%, that is certainly high, but I think we are looking at all aspects of inflation at this point."