In its Macroeconomic and Monetary Development Report, RBI has cautioned that though the growth will improve, but inflation will stay sticky

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RBI Released Macroeconomic and Monetary Developments in 2012: RBI in its Macroeconomic and Monetary Development Report has cautioned that inflation is likely to remain "sticky" at the current level through out the fiscal (2012-13). It hinted at lowering interest rates saying that focus of monetary policy needs to be shifted to arrest declining growth while keeping inflation under control. The inflation was 6.89 per cent during March, while the growth during 2011-12 declined to three-year low of 6.9 per cent. The government, however, has pegged it at 7.6 per cent for the current fiscal. The report warns that high oil prices and suppressed inflation will leave this at the current levels in the new fiscal and that excessive consumption demand has to be curtailed. "The path of inflation in FY13 could be sticky with high oil prices, large suppressed inflation, exchange rate pass-through, impact of (indirect) tax hikes, wage pressures and structural impediments to supply response," the central bank report said. "Growth is likely to improve moderately in 2012-13, supported mainly by a pick-up in industry on the back of consumption demand and some improvement in investment," the report says, adding however, the recovery may be slow in the current fiscal, especially in the first half. According to the RBI-appointed Professional Forecasters' Survey, the 2012-13 growth is pegged at 7.5 per cent, which is 10 basis points below the government projection for the year.

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