Inflation to cool off at 8.5%

Inflation has been rising steadily and has hit all time high of 13% during 2nd week of June. Moody's, Global credit rating agency, had commented that the inflation rate would come down to 8.5% by this year end by tightening the monetary policy and duty cuts.

Recently Reserve Bank of India has raised the interest rate of short term lending to the banks and the mandatory deposits which the lenders are required to maintain with the Central Bank by 0.5% each to face the inflation.

Moody's also said that the RBI would further tighten the monetary policy this year.

According to the Finance Minister's adviser Subhasis Gangopadhyay,

"Do not harp on double digit inflation because double digit inflation will stay for some time even if prices completely stabilise because of the way we calculate inflation on the basis of this week last year".