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Upside risk to inflation persists, limited room for monetary easing: RBI

By Religare
Upside risk to inflation persists; RBI governor
The RBI chief affected an aggressive tone and said the room for monetary easing isn't much while the upside risks to inflation from food and commodity prices persist.

Speaking to the reporters, Duvvuri Subbarao said, "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."

Earlier, RBI had cut its key policy rates for the first time in nine months in January, but resisted further easing as it waits for budget 2013-14.

"At this moment there is room for monetary easing, but that room is limited ans we have to make a careful judgement on how to use that limited room," added Subbarao.

India's high fiscal and current account deficits, in addition to inflation risks are deterrents for any further monetary easing, which are seen necessary to support sagging GDP growth.

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