Indian central bank ‘intensively examining’ inflation options

MUMBAI, June 23, 2008 (AFP) – The governor of India’s central bank said Monday he was looking at new options to halt a surge in inflation, currently running at a 13-year high. “We are currently in the midst of intensive examination of issues and options,” Reserve Bank of India chief Y.Y. Reddy said at a function in the western city of Pune.

Economists expect the RBI to either hike a key short-term rate or raise the amount of money banks have to set aside, to curb liquidity and inflation.

“Most of the latest hike in inflation is on account of higher oil prices. We will continue to take determined and calibrated measures with a focus on managing (inflation) expectations,” Reddy said.

“On the basis of current information, we don’t come to the conclusion that managing this problem will necessarily involve sacrificing growth. All measures will be carried out in a calm and calculated manner,” he said.

Reddy said he met India’s finance minister P. Chidambaram and consulted key advisory committee members last weekend, after annual inflation in the world’s second fastest-growing major economy jumped to 11.05 percent for the week ended June 7, from 8.75 percent a week