Finance Minister backs RBI move on rates

The government on Tuesday gave a nod to the Reserve Bank of India to take appropriate action to tame accelerating inflation.

The government on Tuesday gave a nod to the Reserve Bank of India (RBI) to take appropriate action to tame accelerating inflation.

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"Whatever appropriate steps are required to be taken to control inflation will be taken," Finance Minister Pranab Mukherjee said.

Wholesale price-based inflation unexpectedly accelerated in May, heightening expectations that the RBI would raise rates before its July 27 review meeting despite concerns over Europe's debt crisis.

"Food inflation has started coming down a little bit, (but) not fully. With the expectation of good monsoon, I think moderating influence will be there from the middle of July onwards," Mukherjee said.

RBI Deputy Governor KC Chakrabarty also indicated a rate hike could come soon.

"The possibility is always for the rate rise. For us inflation is a bigger concern than Europe."

(With inputs from PTI and Reuters)