Inflation across board, still too high to cut rates: Rajan

Stating that it is not just food prices that are persistently high but even those of other items which remain elevated, Reserve Bank Governor Raghuram Rajan on Monday said prices across the board have to come down to enable him to reduce key rates.

‘Inflation is high not only in food, but also in non-food items and the best solution for the country is to bring it down. Then I can cut interest rates,’ Rajan told bankers at a summit organised by industry

body Ficci here.

‘I have no desire to keep interest rates high for even a second longer. I want to bring down interest rates when it is feasible and that would be when we have won the fight against inflation,’ he said.

‘There is no point in cutting interest rates to see inflation pick-up again,’ Rajan said, adding that right now he thinks the central bank is continuing the way it proposed recently. Taking a dig at the industry for its persistent demand to cut lending rates even when there is a price increase in the sector, the Governor asked them to bring down prices.

‘When you do that then we will do that, we have no problem. Clearly you will have no consensus on this,’ he said.

The Reserve Bank is targeting retail inflation of eight per cent by January next year and six per cent by January 2016 as suggested in the Urijit Patel report.