Amid rising concerns over high inflation in the country, the Reserve Bank of India (RBI) Governor Raghuram Rajan has asserted that the central bank is determined to bring down consumer inflation through a combination of demand and supply management. Highlighting inflation as a pernicious disease which is eroding household financial savings, Raghuram Rajan said that controlling inflation is RBI’s paramount objective.
The RBI aims to bring down CPI inflation to around 8 per cent by the end of January 2015 and to 6 percent by the end of the following year. The RBI Governor stressed that the government and central bank would have to work together if inflation has to be brought under control. Further, the Governor added that currently central bank is working with the government to create a clear monetary framework.
The CPI inflation rose by 8.28% y-o-y in May as compared to 8.59% in April on account of high prices of food articles and fuels. The Reserve Bank of India (RBI) has raised lending rate three times since September’13 in order to tame price rise through cooling demand. On the other hand, the government has also taken a number of measures over the recent month to improve the supplies of food products.