RBI governor meets FM ahead of policy review

Days before he is scheduled to announce the second quarter review of credit policy, Reserve Bank of India governor D Subbarao met finance minister P Chidambaram on Friday.

"I met the finance minister and reviewed macro-economic situation with him," Subbarao said after the meeting. The RBI is scheduled to review its monetary policy for Q2 on October 30.

The finance ministry has been pitching for a rate cut by the central bank to prop up flagging growth and revive industrial activity.

With factory output not showing much of a turnaround, Prime Minister's Economic Advisory Council chairman C Rangarajan has scaled down earlier GDP forecast of 6.7 per cent to 6 per cent in the current fiscal.

But the RBI's hands may be tied as headline inflation jumped to a 10 month high of 7.81 per cent in September while retail inflation stood at 9.73 per cent in the month.

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