Prices to fall in 2-3 months: Reddy | business | Hindustan Times
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Prices to fall in 2-3 months: Reddy

business Updated: Apr 29, 2008 21:26 IST

Sounding optimistic of 8-8.5 per cent economic growth this fiscal, Reserve Bank Governor YV Reddy on Tuesday said inflation is expected to moderate within the next 2-3-months and for the fiscal a figure of around 5.5 per cent was "realistic".

Reddy also said that on a rough assessment derivative transactions done by some banks posed no systemic risk.

"Within the next two-three-months, inflation should begin to moderate," the RBI Governor said in his customary post-credit policy news conference here today.

Earlier in the day Finance Minister P Chidmabaram also told reporters in New Delhi that RBI's monetary policy and steps taken by the government in the last three weeks on the food front and the measures announced today together would have an impact on the price situation.

The Reserve Bank Governor also said banks have also been asked to review their advances to traders in agricultural commodities to ensure that bank finance is not used for hoarding which can fan inflation.

Banks would have to forward the first such review to the Reserve Bank by May 15, Reddy said.

Reddy said the medium-term objective is to bring inflation to around 3 per cent but a figure of around 5.5 per cent this fiscal was "realistic" one.

Noting that domestically the only "pressure-point" in the economy was inflation, Reddy said RBI's major focus was to curb price rise. "It (inflation) is our highest priority."

Explaining the rationale behind a third 0.25 per cent cash reserve ratio (CRR) hike in less than two weeks, the RBI Governor said that the decision was taken "after looking at possible liquidity evolution or anticipated liquidity."