Inflation should be brought down to 4-6 per cent: D Subbarao

The country's inflation is still high and stubborn and should be reduced and held in a range of 4 to 6 per cent, D Subbarao, governor of the Reserve Bank of India (RBI), said on Wednesday.

The country's headline wholesale price index inflation had been above 7 per cent from 2009 until January, when it fell to 6.62 per cent from a year earlier. It is expected to have eased further to 6.54 per cent in February, a recent Reuters poll showed.

"The RBI has to ensure that inflation is brought down to the threshold level and is maintained there," Mr Subbarao said in the text of a speech to students in London, a copy of which was made available to journalists.

Despite continued high inflation, 32 of 40 analysts, in a recent Reuters poll, predicted the RBI would cut its key policy repo rate by 25 basis points to 7.50 per cent at its review of monetary policy on Tuesday.

Mr Subbarao also said a large fiscal deficit remains one of India's biggest macro-economic challenges, and credible fiscal consolidation is a necessary pre-condition for securing non-inflationary growth.

Copyright @ Thomson Reuters 2013