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RBI sees no rate impact from drought

The Reserve Bank of India governor said on Monday the bank would continue with its soft interest rate policy, adding he saw no impact on monetary policy from a drought afflicting parts of the country.

"(On the) liquidity and monetary side, I don't see any problem," Reserve Bank of India chief Bimal Jalan said when asked about the effects of the drought on monetary policy.

"There is no relation between the two," Jalan added when asked by reporters whether the bank would have to cut the key benchmark bank rate as a result of the drought.

Some economists have said pressure could mount on the central bank to cut rates with economic growth in this financial year likely to be hit by India's worst drought in more than a decade.

Jalan also said that creeping inflation "was not a concern as of now".

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