The Finance Ministry sees scope for a policy rate cut by the Reserve Bank of India at the monetary policy review meeting on Monday.
With core inflation holding where it was, there is a legroom indeed for a rate cut, Dr Kaushik Basu, Chief Economic Advisor in the Finance Ministry, told reporters here.
He highlighted that although inflation had gone up quite a bit, core inflation had in fact gone down only a tiny bit. “Usually monetary policy is directed towards core inflation,” Dr Basu pointed out. He said that RBI had a very tough act to undertake three days from now. This is because inflation had not gone down quite as much, while growth has gone down a lot.