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RBI undecided on easing monetary policies

The Reserve Bank has said rising inflation and 'still tentative' recovery in economic growth is making it difficult for the central bank to decide whether to exit from monetary easing measures.

business Updated: Sep 29, 2009 17:22 IST

The Reserve Bank has said rising inflation and 'still tentative' recovery in economic growth is making it difficult for the central bank to decide whether to exit from monetary easing measures.

"Early return to the fiscal consolidation path, and exit from the expansionary fiscal and accommodative monetary policy remain the key challenge... The policy choices are becoming increasingly complex for the RBI, as signs of recovery in growth are still tentative, whereas inflation is clearly firming up," RBI Deputy Governor KC Chakrabarty said here.

"The challenge has to be seen, however, in the context of the ultimate objective, which is faster and durable recovery in growth. The costs of delay in timely exit are being discussed now; but there are costs of delay in economic recovery as well," Chakrabarty said at a recent anniversary convention of the Association of Professional Bankers of Sri Lanka.

Chakrabarty said the rising inflationary pressures could limit the scope for sustained growth supportive monetary policy stance.

Though wholesale price inflation remained low at 0.37 per cent for the second week of September, food prices are soaring which have pushed various kinds of consumer price inflation to double digits.