Price control on war footing; PM to meet RBI Governor

Mangalore Today News Network

New Delhi, Jan 12, (PTI): Amid rising food inflation, Prime Minister Manmohan Singh is likely to hold discussions with Reserve Bank Governor D Subbarao on Wednesday on the possibility of further monetary steps to check price rise.

The Prime Minister, according to sources, may meet RBI Governor to discuss price situation as part of the exercise to tame food inflation which soared to year’s high of 18.32% on December 25.

Worried over rising prices of onion, other vegetables and milk, Prime Minister met senior Cabinet colleagues earlier in the day to work out a strategy to deal with rising inflation.

Singh’s meeting with Subbarao comes ahead of RBI’s quarterly review of monetary policy on January 25.

The Reserve Bank has already raised the short-term key borrowing and lending rates six times in 2010 in a bid to raise cost of funds and check inflationary expectations.

Although the RBI action pushed up the lending and deposit rates of banks, the impact has not been profound in case of food inflation.

With food inflation continuing to rise, experts were of the opinion the central bank could hike key policy interest rates (repo and reverse-repo rates) by at least 25 basis points in its monetary review later in the month.

Experts also feel that overall inflation for December would be over 8% as compared to 7.48% in November. The figures for December are scheduled to be announced later this week.