Reserve Bank of India (RBI) has hinted at more "swift" action to contain inflation, if there was no let up in price rise that is mainly driven by relentless increase in crude oil rates in the international market.
An indication to this effect was given by the RBI on Tuesday while announcing the 50 basis points increase in the short-term lending rates to banks and mandatory deposits that banks are required to keep with it.
"A continuous heightened vigil over ensuing monetary and macroeconomic developments is warranted to enable swift responses with appropriate measures as necessary, consistent with the monetary policy stance," RBI said in a statement.
The swift action on the monetary front would be taken by the RBI to anchor expectations of price rise and also contain inflation which soared to 13-year high of 11.05 per cent for the week ended June 7.
The critical element of the public policy, RBI said, should be to moderate and manage aggregate demand so that pressures on prices are not intensified.
The policy, it said, needs to deal with the impact of rising international crude prices which, according to a Finance Ministry statement, rose from to US $ 134.63 per barrel on NYMEX on June 20, the trading day preceding Jeddah meeting, to US $ 136.80 per barrel this morning.
Pointing out that besides oil prices there are some underlying inflationary pressures impacting inflation in India, RBI said: "Excluding the fuel sub-group, inflation rose to 9.61 per cent (for the week ended June 7) from 5.9 per cent a year ago."
If the fuel and food is excluded, inflation would work out to be 10.33 per cent as against 6.33 per cent a year ago, it said.