RBI chief on inflation and interest rates

Following are comments from new Reserve Bank of India (RBI) Governor Duvvuri Subbarao at his first news conference on Tuesday after taking over from Y.V. Reddy on Sept. 5.

Inflation:

`The current high level of domestic inflation reflects a combination of supply-side pressures as well as demand-side factors.

`However, the present inflation is largely a global phenomenon and is being driven by key international commodity prices, especially of crude oil, metals and food. These external pressures are being exacerbated by strong domestic demand pressures.

`Dampening demand and anchoring inflation expectations has been the logic behind Reserve Bank`s monetary stance.

`For sustained economic growth, it is essential that inflation and inflation expectations be contained.`

(The RBI has said it aims for wholesale price inflation to fall to about 7 per cent by the end of the fiscal year in March 2009)

Text: Reuters

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