Mumbai: Reserve Bank of India (RBI) today (Mar 11, 2004) said it was closely monitoring the inflation trends "carefully in light of unexpected developments in the global oil and commodities market".

"There have been some unexpected developments in the international commodities and oil market but it is too premature to take a particular view on the inflation and we are carefully watching it," RBI Governor Y V Reddy told reporters at the quality awards function of the Indian Merchants Chamber in Mumbai today (Mar 11, 2004).

Former RBI Governor Bimal Jalan had announced in the beginning of the fiscal that inflation would be in the range of 5-5.5 per cent and it has to be less than that, Reddy added.

RBI had revised the inflation outlook to 4-4.5 per cent for the current fiscal in its mid term review.

Referring to the Market Stabilisation Fund (MSF) to suck out excess liquidity, Reddy said the scheme has been worked out in such a way that it would satisfy all the market participants.

The MSF would be merged smoothly with the Government borrowing programmes, the Governor said.