RBI rate hike to ease inflationary pressure, says FM

New Delhi, July 26 (PTI) Welcoming the Reserve Bank's
decision to hike key rates by a hefty 50 basis points, Finance
Minister Pranab Mukherjee on Tuesday said it will help bring
down inflation to a comfortable level of 6-7 per cent by
year-end.
"The Reserve Bank of India has sought to give a strong
signal to further moderate inflation and check inflationary
expectations," Mukherjee said.
Inflation has remained stubbornly close to double-digit
levels during the first quarter of the current fiscal.
Mukherjee said the RBI rate hike was necessary to bring down
inflation to an acceptable level at the earliest.
Overall wholesale price-based inflation stood at 9.44 per
cent in June. To tame the inflation monster, the RBI today
hiked key policy rates by 50 basis points.
"With this policy adjustment, we will be able to get back
to a more comfortable inflation situation that takes us to the
year-end inflation level of 6 to 7 per cent," Mukherjee added.
The RBI has hiked its policy rates 11 times since March,
2010, to curb inflation. However, the problem persists.
Mukherjee said although food inflation has moderated in
recent months, pressure in manufactured items has hardened.
While coming out with its first quarterly policy review
for the 2011-12 financial year, the RBI admitted that there
has been a moderation in growth, but maintained its previous
estimate of 8 per cent GDP growth for the current fiscal.
Mukherjee said, "The overall GDP growth for 2011-12 so
far is in line with the momentum attained in 2010-11."
There have been concerns that the country's economic
growth could see some moderation on the back of a deceleration
in factory output growth in April-May.
Industrial output growth in April-May this year averaged
5.7 per cent, compared to 10.8 per cent in the same period
last year.