India's central bank, the Reserve Bank of India (RBI) is not likely to reduce its key interest rates in the country due to surprising high inflation number for April, according to C Rangarajan, the chairman of the Prime Minister's Economic Advisory Council.
He said that the high inflation numbers for the month of April has made it very difficult for the central bank to consider reducing its key interest rates. High inflationary pressures made results in a narrow scope of action from the RBI.
"We need a detailed analysis of the factors which have contributed to the rise in inflation, but I would say that policy must address controlling inflation in an adequate fashion," he said.
Economists and industry members want the central bank to cut rates to give a boost to the slowing economic growth. The inflation in the country started moderating in November after staying above 9 per cent for a year. The inflation had fallen to a 26-month low of 6.55 per cent in January. RBI's deputy governor Subir Gokarn had earlier indicated that RBI's stand on monetary policy will depend on the level of oil prices in the international markets and the domestic economic growth rates.
The RBI has not changed its key lending rates since its policy review in mid-December. It had increased the rates 13 times since March 2010 in order to control the stubborn inflation in the country. The last cut in the repo rate was in April 2009.
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