Chief Economic Advisor Kaushik Basu said the Reserve Bank of India (RBI) was likely to assess inflation trends in March before finalising the forthcoming annual monetary policy to be announced on April 20.
“RBI raised repo and reverse repo rates to give signal to markets on inflationary expectations, as inflation has slightly spilled over to manufactured products,” Basu said.
He, however, noted that food inflation had been moderating and during the first week of March, there was considerable decline in it. “Fortunately, food inflation is coming down. This RBI action is a bit of anticipatory move,” Basu said.
To a query on whether RBI would further tighten monetary policy in April, Basu said it would depend on how inflation pans out in March, figures of which would be available around the middle of the next month.
If inflation does not spread much to other areas from food articles in March, RBI may retain the rates, but if it spreads much to other areas, it may take further action. “That is a normal monetary practice,” Basu said.