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"In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards", RBI Governor D Subbarao said in the mid-quarter monetary policy review.
The RBI is slated to announce the third quarter policy review on January 29. The central bank is closely monitoring the evolving growth -inflation dynamics and would update projections for 2012-13 in the third quarter review, RBI said. It said the biggest risk to outlook stems from global politico-economic developments which could delay resolute policy action.
Referring to inflation, it said, while WPI is showing some signs of moderation, retail inflation has continued to remain elevated. "The non-food component of the index also suggested persistent inflationary pressure". "the emerging patterns reinforce the likelihood of steady moderation in inflation going into 2013-14, though inflation may edge higher over the next two months".
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