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Mumbai: India's inflation remains low and expectations appear to be consistent and stable, though global commodity, food and crude prices were high, the central bank's deputy governor, Rakesh Mohan, said.
In a speech delivered at Yale University in the US on Monday, Mohan said the Reserve Bank of India (RBI) was on an enhanced vigilance to respond appropriately to global uncertainties.
The speech was made available on Tuesday.
Mohan said the threshold of inflation tolerance in the economy has come down significantly and that the challenge for monetary policy was to reduce inflation in the medium term towards global levels.
Wholesale price inflation is hovering near a five-year low, just above three per cent in mid-November. The central bank broadly aims to keep inflation close to five per cent in the current fiscal year ending in March.
Inflation targeting may not be appropriate for India as sustaining growth was also an objective for the world's second-fastest growing major economy after China, Mohan said.
"Unlike many other developing countries, we have had a record of moderate inflation, with double-digit inflation being the exception, and which is largely socially unacceptable," he said.
The government has not raised state-set fuel prices for nearly one-and-a-half years despite high world crude prices.
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