Containing inflation RBIs primary focus: Kochhar

Mumbai: Price stability has taken precedence over growth and containing inflation and anchoring inflationary expectations has been the focus of the Reserve Bank of India in its monetary policy statement for FY 12, a top banker said.

The RBI`s policy stance is necessary "to maintain a sustainable growth momentum in the economy over the medium- term," ICICI Bank`s Managing Director & CEO, Chanda Kochhar, said in a statement here on Tuesday.

Earlier in the day, the Reserve Bank had hiked its repo rate by 0.50 per cent to 7.25 per cent besides increasing the interest rate on savings account deposits to four per cent from the earlier 3.5 per cent.

While the RBI`s policy stance could result in interest rates rising, it would help maintain financial stability, she said.

"While it signals an upward movement in interest rates in line with the immediate priority of containing inflation, it will maintain financial stability that will provide a basis for sustainable growth over the long term," the ICICI Bank chief said.

The RBI has indicated inflation for March 2012 at six per cent, with elevated levels in the first half of the year while GDP growth has been projected to moderate during fiscal 2012 to around eight per cent.

This (8 per cent GDP growth) is still a healthy level of growth that would place India among the fastest growing economies in the world, Kochhar said.