No pressure on interest rates: FM

Finance Minister P Chidambaram said the rise in inflation to 5.16% will not put pressure on interest rates as there is ample liquidity in the economy.

"Inflation will hover between 4-5% if supply side constraint persists," Chidambaram said.

The Finance Minister said that inflation crossed 5% because of fuel and lighting components.

Medium-term moderations in inflation will set in only when supply constraints are addressed, he said. "The constraints will be addressed once new sugar, new wheat come in," he said.

The Reserve Bank is due to come out with the quarterly review of the Monetary Policy later this month.