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RBI dents hopes for rate cut, blames rising inflation & CAD

By Religare

RBI dents hopes for rate cut, blames rising inflation & CAD
Owing to upside risks of inflation and rising current account deficit (CAD), RBI belied hopes of any further rate cuts.

"Growth is significantly moderated, inflation is somewhat off its peak but there are several upside risk factors, the balance of payments is under stress and investments have to pick up," RBI Governor D Subbarao said here.

Observing that retail inflation is "still high", Subbarao said in India even as growth is decelerating, inflation is not decelerating.

"Global prices, especially commodity prices, certainly softened in the last few months. But we cannot take the soft prices for granted," he said.

"Rupee has depreciated more than compared to other economies ... Large CAD is the biggest risk factor to the economy today," he said, adding that the CAD for 2012-13 is likely to be close to 5 per cent.

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