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Rate hike will bring down inflation, hopes Pranab

By The Assam Tribune

NEW DELHI, Sept 16 (IANS): Finance Minister Pranab Mukherjee Friday said hike in key policy rates by the Reserve Bank of India would help bring down inflation to a "comfortable" level sooner rather than later.

The RBI, the country's central bank, Friday hiked key rates by 25 basis points in the 12th such exercise since January 2010 to tame stubborn inflation.

"I am hopeful the measure taken would get us back to a more comfortable inflation situation sooner rather than later," Mukherjee said while reacting to the monetary policy update.

Mukherjee said even though the growth was affected in the recent months due to aggressive monetary tightening, it has left "scope for growth to pick up in the second half of the year".

India's Gross Domestic Product (GDP) growth declined to 7.7 percent in the first quarter of 2011-12 from 7.8 percent in the previous quarter and 8.8 percent in the corresponding quarter of the previous year.

Industrial output growth slumped to 3.3 percent in July, the lowest in 21 months.

While the impact of the aggressive monetary tightening by the RBI is clearly visible on the growth, it has not been able to curb inflationary pressure.

Latest data showed annual inflation rate for August, based on the wholesale price index, inching closer towards double digits at 9.78 percent, while the country's food inflation still remained at elevated levels.

Food inflation was recorded 9.47 percent for the week ended Sep 3, much above the regulator's comfort level of 4-5 percent.

"The headline inflation continues to be a matter of concern at over nine percent over the last 12 months, with significant supply and demand side factors contributing to it," the finance minister said.

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Rate hike will bring down inflation, hopes Pranab

NEW DELHI, Sept 16 (IANS): Finance Minister Pranab Mukherjee Friday said hike in key policy rates by the Reserve Bank of India would help bring down inflation to a "comfortable" level sooner rather than later.

The RBI, the country's central bank, Friday hiked key rates by 25 basis points in the 12th such exercise since January 2010 to tame stubborn inflation.

"I am hopeful the measure taken would get us back to a more comfortable inflation situation sooner rather than later," Mukherjee said while reacting to the monetary policy update.

Mukherjee said even though the growth was affected in the recent months due to aggressive monetary tightening, it has left "scope for growth to pick up in the second half of the year".

India's Gross Domestic Product (GDP) growth declined to 7.7 percent in the first quarter of 2011-12 from 7.8 percent in the previous quarter and 8.8 percent in the corresponding quarter of the previous year.

Industrial output growth slumped to 3.3 percent in July, the lowest in 21 months.

While the impact of the aggressive monetary tightening by the RBI is clearly visible on the growth, it has not been able to curb inflationary pressure.

Latest data showed annual inflation rate for August, based on the wholesale price index, inching closer towards double digits at 9.78 percent, while the country's food inflation still remained at elevated levels.

Food inflation was recorded 9.47 percent for the week ended Sep 3, much above the regulator's comfort level of 4-5 percent.

"The headline inflation continues to be a matter of concern at over nine percent over the last 12 months, with significant supply and demand side factors contributing to it," the finance minister said.