No rate hike now: Reddy

The Reserve Bank of India (RBI) has indicated that the recent spurt in inflation is mainly the result of a supply shock and the central bank does not see any reason to rein in demand.

The central bank also indicated that given the uncertainty over the outlook on global interest rates and oil prices, Indian markets needed to be prepared for the inevitable reality of interest rate cycles.

"What we are experiencing is a supply shock and the RBI is monitoring it carefully," RBI Governor YV Reddy told bankers here during the launch of a national financial switch. He added that the apex bank was not mulling an interest rate hike in the short term.