Under severe attack for the runaway inflation, Finance Minister P Chidambaram said on Saturday, there is no room for panic and promised more measures both from the government and the RBI to stem prices.

Immediately after meeting RBI Governor Y V Reddy, who also met Prime Minister Manmohan Singh, Chidambaram said: "We should not give room for panic. We should take steps to quell inflationary expectations...that is preciesly the course that the government has adopted in the past and will adopt in future too."

In a statement circulated to the media by the Finance Secretary D Subbarao, Chidmabaram said he had met Prime Minister Manmohan Singh last night even as the political parties, including the Left allies, pilloried for what they called failure in management of prices.  

Chidambaram also met Congress President Sonia Gandhi to appraise her of the situation and the steps that were being taken to tackle inflation, 94 per cent increase in which was due to hike in fuel prices.

First line of defence would be the monetary policy and the RBI is expected to take appropriate steps to keep a lid on inflationary expectations, Subbarao told reporters while fielding a barrage of questions on the government's course of action.

"Price management will be priority in a trade-off between growth and inflation," he said, but added that inflationary pressures would be felt for next few months because of the base effect.

Stating that the momentum of inflation is slowing,  Subbarao said food situation is quite comfortable and also manufacturing inflation is modest. 

However, there is little control over global  uncertainties, he said, adding prices of crude oil depend on global factors like decision of Organisation of  Petroleum Exporting Countries (OPEC) to enhance supply.

Now the question is how to manage the impact and do  adjustment accordingly, he said.

Subbarao said debt equity ratio of corporates continues to be low. "We believe that investment prospect continues to be promising."

Speaking about effectiveness of monetary policy, Chief  Economic Advisor to the Finance Ministry Arvind Virmani said, there is a lag between monetary policy action and inflation control.

• Inflation, the silent killer!