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Easing inflation provides room for rate cut by RBI: Jaitley

The government would soon put in place a monetary policy framework to ensure that inflation remains below 6%, he said

Press Trust of India  |  New Delhi 

Arun Jaitley
Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi.

Making a case for rate cut by RBI, Finance Minister Arun Jaitley today said that retail inflation is expected to remain close to 5% which allows further easing of monetary policy.

The government would soon put in place a monetary policy framework to ensure that inflation remains below 6%, he said..

Read our full coverage on Union Budget "To ensure that our victory over inflation is institutionalised and hence continues, we have concluded a monetary policy framework agreement with the Reserve Bank of India. The framework objective is to keep inflation below 6% and we will move to amend the RBI Act this year and provide for monetary policy committee," Finance Minister said while presenting the for 2015-16.

"One of the achievements of my government has been conquering inflation. This decline in inflation requires a structural shift," he said.

"We expect CPI (Consumer Price Index) inflation to remain close to 5% by end of the year. This will allow further easing of monetary policy," he said.

In the last Budget, the Finance Minister had said it is also essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy.

Government will, in close consultation with the RBI, put in place such a framework, he had said.

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First Published: Sat, February 28 2015. 11:57 IST