RBI must keep low inflation in mind while deciding interest rates, says Arun Jaitley

In what could be a pressure-building tactic, Finance Minister Arun Jaitley said on 16 September that he hoped that the Reserve Bank of India will keep in mind the decline in retail inflation while deciding on interest rates at its monetary policy review meeting on 4 October.

"I expect when the policy review takes place next month then RBI, and hopefully if MPC ( Monetary Policy Committee) constituted by then, they will collectively keep all these factors in mind," said Jaitley.

In its monetary policy review last month, the RBI maintained a status quo on key rates citing upside risks to 5% inflation target for March 2017.

For the month of August, retail inflation eased to a five-month low of 5.05% . On the other hand, factory output contracted by 2.4% in July raising demand from the industry for a rate cut by the RBI.

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