Indian bank chief wary on prices

Mr Subbaro says inflation is moderating.

Inflation has moderated but still poses a risk to the Indian economy, India's new central bank governor has said.

Reserve Bank of India Governor Duvvuri Subbarao added that India's recent slowdown in growth would be temporary.

India's annual wholesale inflation rate (WPI) is running at 12.34%, down from a peak of 12.63% in early August.

India has opted to increase interest rates in a bid to temper quickening inflation, but this has undermined economic growth.

India's economy grew by 7.9% in the second quarter - its slowest rate for more than three years.

The comments came during Mr Subbarao's first press event after taking over from YV Reddy as governor on Friday.

"It is too early I believe to take a call on inflation, however, I do have some sense of satisfaction in moderation of the WPI numbers," he said in his first news conference as governor.

Boom 'intact'

The central bank has been raising rates to cope with rising inflation, and they now stand at 9%, an increase of 1.25 percentage points since April.

He said the factors underpinning India's economic boom - private consumption, a rise in private investment and export growth - were still intact.

"I believe these engines of growth are still on track. The recent moderation is only a cyclical downturn."

"The structural India growth story is still intact and credible."