The finance minister, Mr Pranab Mukherjee, on Monday said that the hike in prices of petroleum products will have some inflationary impact in the short-term but price pressures will moderate from the middle of July.
“There will be some impact (on inflation) in the short-term, but it will be absorbed in the course of time,” the finance minister, Mr Pranab Mukherjee, said.
On whether increase in inflation would prompt the RBI to raise policy rates, Mr Mukherjee said this decision (on policy rates) is the prerogative of the central bank, which will consider all factors in its July policy review.
As inflation is already in double digits, some analysts expect the RBI to tighten monetary policy by raising policy rates, while others think RBI would wait till July 27. — PTI