Reserve Bank of India governor Bimal Jalan said on Tuesday that the central bank was comfortable with the current level of inflation and was not worried about a recent rise in the rate.
"I am comfortable with inflation at the present level," Jalan replied, when asked whether he was worried about the recent sharp rise in the inflation rate, which economists attributed to rising fuel prices.
When asked if rising oil prices could impact inflation, Jalan said: "We will wait and see. It depends on oil prices and on how the drought situation evolves, but there are no worries."
The inflation rate, as measured by wholesale prices, shot up to 4.42 per cent on year on January 18 from 3.72 per cent a week earlier.
Bond yields have bounced off lows in recent weeks as traders fear that a war in the Middle East could push up prices of crude oil, India's biggest import item, hurting the rupee and fuelling local inflation, putting pressure on low interest rates.