India's finmin: immediate goal is to control inflation

(Updates with details, quotes)

HYDERABAD, India Nov 3 (Reuters) - India's finance minister said on Friday the government's immediate goal was to control inflationary expectations and that it would take all fiscal and monetary measures to moderate inflation towards 4 percent.

"The most important and immediate goal of the government is to control inflationary expectations," Palaniappan Chidambaram told a banking seminar in the southern city of Hyderabad.

"The (central bank) governor has through a modest increase in the repo rate signaled that he would be ready and willing to take monetary steps. So is the government ready and willing to take fiscal steps," he said.

The Reserve Bank of India raised its key lending rate, the repo rate, by 25 basis points to 7.25 percent on Tuesday while keeping other policy rates, including its main borrowing rate, steady.

Rising domestic consumption and high credit growth pushed inflation to a one-year high of 5.44 percent in June, forcing the central bank to raise its lending rate four times so far in 2006.

Inflation for the year to Oct. 14 stood at 5.26 percent, and the latest figures are due to be released by the government on Friday.

"Our repeated goal is to ensure that the inflation rate moderates towards 4 percent. .. It will require a mix of monetary and fiscal steps. We will take these steps," Chidambaram said.

Separately, he said he was confident the economy would grow by over 8 percent in the current fiscal year that ends March 31, 2007.