Mumbai: Reserve Bank of India deputy governor Rakesh Mohan said on Friday that this week's cut in the retail price of fuel will have an impact on inflation.
"The fuel price will come into wholesale price index," Mohan told reporters on the sidelines of a function.
"We have a constant review of all changes that take place ... we are constantly monitoring," he added.
The Government cut retail petrol and diesel prices by 4.25 per cent and 3 per cent respectively on Wednesday, and analysts expect it would lead to lower increases in the wholesale price index.
The wholesale price index rose 5.45 per cent in the 12 months to November 18, higher than previous week's annual rise of 5.29 per cent due to a rise in mineral and manufactured product prices.
Analysts expect the cut in retail fuel prices could lower headline inflation by 10-20 basis points, but it could also add to demand pressures in a rapidly growing economy which might prompt the central bank to raise interest rates again.
The economy grew by 9.2 per cent in the July-September period from a year earlier, faster than an annual rate of 8.9 per cent in the previous quarter, data on Thursday showed.
"High economic growth is a welcome event. We have not made a formal review since October and we have not taken a review after the latest data," Mohan said.
The Reserve Bank raised its key lending rate by 25 basis points to 7.25 per cent and held its key borrowing rate steady at 6.00 per cent in its October policy review. It said it would act promptly to contain inflationary pressures.
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