Reserve Bank Deputy Governor, Subir Gokarn, today said the headline inflation is likely to ease into single digits over the next 2-months on the back of a normal monsoon and lower global commodity prices. "We have seen the monsoon trajectory and the global situation while assessing (the inflationary aspects). In a month or two, inflation will come down to single digits," Gokarn told reporters here today. The apex bank has hiked its overnight lending rate or repo by 0.25 per cent to 5.75 per cent and its borrowing rate (reverse repo) by 0.5 per cent to 4.5 per cent to contain the runaway inflation, hovering above 10 per cent for the last five-months. WPI-inflation stood at 10.55 per cent in June. Gokarn, however, cautioned that the wholesale price inflation could stay in "high single digits for a while" despite a likely easing, before cooling down to 6 per cent by end-March. "The RBI expects it (inflation) to be at a plateau after the fall (into single digits). But it may stay in high single digits for a while," Gokarn, who was previously with global rating agency, Standard and Poor's, said. Announcing the measures, the Reserve Bank said that "the dominant concern that has shaped the monetary policy stance in this review is high inflation." In a clear sign that the apex bank is concerned over the price situation, the RBI also upped its inflation projection for FY 11 to 6 per cent from the 5.5 per cent it had pegged in the April-policy. Elaborating on the policy objective, Gokarn said the central bank's rate actions, which were clearly aimed at curbing inflation, should start showing its impact soon on the high inflation numbers. The RBI, which left the cash reserve ratio (mandatory cash reserve for banks) and bank rate unchanged, said though the current market conditions indicate that the liquidity pressures will ease, the system is likely to remain in deficit mode "for now". Replying to a query, Gokarn said factors like exports and capital flows will have a larger bearing on the GDP growth than monsoon.

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