The Reserve Bank Governor D Subbarao on Friday reiterated that the challenges before the apex bank are ensuring price and financial stability, anchoring inflationary expectations and maintaining the growth momentum.
"The (RBI's) focus would be on ensuring price and financial stability, anchoring inflationary expectations and maintaining the growth momentum," Subbarao said after RBI's mid-term review -- the first after Subbarao took over as RBI's head-- of its monetary policy for this fiscal.
Subbarao said double-digit inflation and moderation in growth continued to remain critical policy concerns. The RBI has kept the inflation target unchanged at 7 per cent by the end of this fiscal.
"Inflation continues to be a concern at 11 per cent -- it is beyond the tolerance level and unacceptable. Despite its downward trend (in recent weeks), we cannot let our guard slip." Subbarao said.
Finance Minister P Chidambaram also on Thursday said inflation remains high. Registering a fall for the fourth week in a row, the rate of price rise has come down to 11.07 per cent after touching almost 13 per cent in August.
"We are targeting an inflation level of 7 per cent by end-March and our mid-term goal is 5 per cent. But there is no time-frame for this," the RBI governor said.
Emphasising the need for strong credit quality at a time when credit has expanded rapidly, Subbarao said that banks needed to be careful about rapid credit expansion. They must keep an eye on credit quality," he said.
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