RBI sticks to inflation forecast

The Reserve Bank of India has stuck to its inflation forecast for the current fiscal, despite the rise in international oil prices.

The RBI Governor YV Reddy told reporters before meeting finance minister P Chidambaram today, that there was no need to revise the projection of 6.5 to 7 per cent GDP growth rate made in the annual policy statement of the bank.

The RBI had forecast that the inflation rate will be 5 per cent in 2004-05, in its credit policy. It had also kept the benchmark bank rate unchanged at 6.0 per cent and the repo rate at 4.5 per cent.

The governor said the hike in the international crude oil prices was not a shock for the economy, instead it was a certainty, which did not create any new factor for the economy to have to wrestle with. The governor's inputs will be significant in the upcoming Budget to be presented by the new government st the Centre.