RBI might cut more rates if inflation falls

RBI governor Raghuram Rajan has said that the bank may further lower the interest rate if there is a constant fall in inflation and the monsoon turns out to be good.

"We are looking at inflation. If it continues on a downward path, that would create room (for further rate cuts)," he said.

Earlier this month, RBI had reduced its policy rate by 0.25% and brought it down to 6.5%, which has been its lowest level in more than five years. In this first rate cut after a gap of six months, the rate was lowered cumulatively since January 2015. This even led to the banks lowering their rates by 0.25-0.5%.

RBI is also keeping an eye on the monsoon progresses this year, especially after two consecutive bad years.

He also added that India has got it "right" when it comes to managing the macro-economic scenario, in spite of several other economies struggling because of tough global conditions.

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