India needs to see substantial softening of inflation: Rajan

Reserve Bank of India (RBI) Governor Raghuram Rajan has said India needs to see a substantial softening of both headline inflation as well as some momentum in the right direction for core inflation,

The central bank unexpectedly kept the country's policy interest rates on hold on Wednesday, despite calling current inflation too high, citing the prospect of easing retail prices and its concerns about the weak domestic economy.

"There are indications that vegetable prices may be turning down shortly ... our current reading from the metros suggest a significant fall in vegetable prices, both at the wholesale and retail level, which gives us reason to keep interest rates stable," Rajan said at the post-policy press conference.

The RBI governor added that the central bank was trying to calibrate monetary policy primarily to target inflation in an environment where growth is weak.