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Fall in inflation to prod RBI rate cut: FM

A moderation in inflation should see RBI cut key lending rate,FM Pranab Mukherjee said.

Written by Agencies | New Delhi | Published: April 17, 2012 10:58:36 am

A moderation in Indian inflation should see the central bank cutting its key lending rate,Finance Minister Pranab Mukherjee said on Tuesday,minutes before the Reserve Bank of India’s annual policy announcement.

The RBI is widely expected to cut its main lending rate,the repo rate,for the first time in three years,by 25 basis points to 8.25 percent on Tuesday,though economists have been paring back their rate cut forecasts for the year amid worries about high commodity prices and a heavy fiscal deficit.

Mukherjee said the government needs to take corrective steps to minimise the impact of high crude prices.

India imports nearly 80 percent of its crude oil needs.

Mukherjee also said the rise in food inflation was a matter of concern,and the country would have to live with 6-7 percent overall inflation for the time being.

Annual food inflation accelerated to 9.94 percent in March compared with 6.07 percent in the previous month,though headline inflation eased to 6.89 percent,as manufacturing inflation slowed,data showed on Monday.

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