Monsoon to determine monetary actions, says RBI

Monsoon to determine monetary actions, says RBIIndia's central bank, the Reserve Bank of India (RBI) has said that the monsoons are likely to determine its monetary policy actions in the coming months.

Experts believe that the outlook on monsoon have an impact on the level of inflation in the country and the central bank has been trying to keep the inflation under control in the Asia's third largest economy by keeping interest rates high in recent years. RBI Governor D. Subbarao said in Hyderabad on Friday that monsoon outlook will be an important factor for determining the monetary policy in the coming months.

He said that the central bank is tracking growth, inflation and balance of payments as well as the monsoon in the country to determine its policy actions ahead of the mid-quarter policy of the central bank. He said while delivering the Institute of Public Enterprise's Golden Jubilee Lecture on `India's Macroeconomic Challenges: Reserve bank Perspectives'.

He noted that the economic growth in the Indian economy has moderated, inflation has fallen from its peak levels and the balance of payment situation is tough for the government. He also expressed concerns over deceleration in investments and said that both external and internal factors have resulted in lower investments.