Inflation

As the government scrambles for measures to boost the slowing economy, a top finance ministry official today said there is scope for an RBI rate cut at the next policy review as retail inflation continues to be low.

The statement comes ahead of the Reserve Bank's bi- monthly monetary policy decision to be announced on October 4.

"There is scope for monetary easing because of inflation projections," the official said, adding that all the government analysis is made on the basis of inflation remaining under 4 per cent in the medium term.

In its last policy review in August, the RBI reduced the repo rate by 0.25 per cent to 6 per cent in August, citing reduction in inflation risks. The rate cut was the first in 10 months and brought policy rates to a near 7-year low.

However, retail inflation rose to a five-month high of 3.36 per cent in August due to costlier vegetables and fruits. The consumer price index (CPI) based inflation was 2.36 per cent in July.

Asserting that the slowdown in the manufacturing sector is due to various reasons, the official said the response has to be from across the board, including interest rate, exchange rate for boosting the manufacturing sector.