No change in RBI's inflation forecast for this year

Reserve Bank of India deputy governor Rakesh Mohan on Wednesday said that there is no change in the central bank's inflation outlook for the current financial year.

Referring to the global crude oil prices, Mohan said, "the situation is not different than what we mentioned in the monetary policy statement."

"We had mentioned that it is the fluctuation and the volatility of oil prices that is among the key risks," he said and went on to add, "We had also provided our assessment on year-end inflation. We have not changed that."

Mohan said that it will be difficult to comment on year-end inflation given that global oil prices are volatile. The pass-through of rise in global prices is still not complete, he said.

Mohan said that the RBI had a consistent exchange rate policy management. "Exchange rate is essentially market determined and it is in response to demand-supply we have been intervening in the forex market to curb volatility," he said.

Mohan said that the passage of the RBI Act amendment by the Lok Sabha will enable the central bank to operate with greater flexibility in coming years.

"The intention is to have greater flexibility in cash reserve ratio and statutory liquidity ratio. Repo, reverse repo have better legal backing for our operation now," Mohan said.

On RBI's projection of credit growth rate falling to 20 per cent in 2006-07, Mohan said: "For those kind of magnitude, longer times is needed to have any assessment."