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Indian central bank sees inflation risks, limited room to ease policy

Published on Feb 16, 2013 5:17 PM
 
Reserve Bank of India (RBI) governor Duvvuri Subbarao speaks during a press conference in Mumbai on Jan 27, 2013. India's central bank chief struck a hawkish note on Saturday, Feb 16, 2013, saying there are upside risks to inflation from food and commodity prices, while room for monetary easing is limited. -- FILE PHOTO: AFP

MOSCOW (REUTERS) - India's central bank chief struck a hawkish note on Saturday, saying there are upside risks to inflation from food and commodity prices, while room for monetary easing is limited.

Headline inflation slowed to its lowest level in more than three years last month, but some analysts say the Reserve Bank of India (RBI) will watch the fiscal and current account gap and inflation risks before easing again.

"There are upside risks for inflation. In particular, food prices are going up as result of cyclical factors... Then, there is pressure on inflation from global commodity prices," Mr Duvvuri Subbarao told reporters in Moscow.

The RBI cut its key policy rate for the first time in nine months last month, but struck a cautious note on further easing as it waits to see how the government's budget aims to bring a bloated fiscal deficit under control.

 
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