RBI To Keep Rates High To Combat Inflation – Deputy Governor

Indian interest rates will remain elevated as long as surging inflation imperils economic growth, a deputy governor of the country’s central bank said.

“If you are having continuously high inflation, it will kill your growth,” the Reserve Bank of India’s K.C. Chakrabarty told Bloomberg TV India yesterday. “If interest rates are high, that’s because inflation is high, and unless inflation is brought down, interest rates will not come down.”

Governor Raghuram Rajan is seeking to quell consumer inflation of more than 11 percent, the highest in the Group of 20 major economies, as bottlenecks in the supply of everything from food to energy stoke price increases. He surprised economists last month by holding the benchmark repurchase rate at 7.75 percent instead of adding to increases totaling 50 basis points since taking over the RBI in September.

Bloomberg

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