headed up towards 9-10 percent," said Daniel Martin, Asia Economist at Capital Economics in Singapore.
That makes the central bank's job more difficult because measures to stifle inflation, such as raising interest rates, could at the same time undermine economic growth, already strained and running at a decade low.
That partly explains why the central bank has not raised its policy rate to support the rupee, unlike Brazil and Indonesia. Instead, it forced up short-term rates.
Rajan, who has received the sort of media attention usually reserved for Bollywood stars, stunned financial markets on his first day in the job on September 4 by announcing a blaze of measures to support the currency and open up markets that triggered a rebound in the rupee and stock markets.
The rupee has recovered more than 6 percent against the dollar since Sept 3. Indian stocks have gained about 8 percent since then. The euphoria spread beyond financial markets. India's top dairy brand, Amul, launched an ad slogan: "Welcome Raghuramul Rajan!"