A silver lining of inflation staying below 1% for the last consecutive eleventh weeks prevails amidst the current global economic crisis.

With this, the new government is determined to augment public spending and stimulate the economy. The country witnessed an unchanged 0.61% inflation rate for the week ended May 16.

Speaking with the media persons earlier this week, the newly appointed finance minister, Pranab Mukherjee said, "Inflation is already reasonably down. There has been a little improvement. So you know we have some leverage."

The food price index went down marginally after rise for eight consecutive weeks with vegetables becoming cheaper.

For the week ended on May 16, the annual increase in the index for primary articles stood at 6.22 per cent. It was 8.27% for food articles, 12.80% for food grains, 8.51% for fruits & vegetables while milk recorded 6.41%.

However, Shubhada Rao (Chief Economist, Yes Bank) feels the other way. According to Rao it would be premature to conclude that seasonal pressures on food items were over.

The crash in the food price index was nullified by the increase in the price of fuel and manufactured items.

Experts do feel that the country's central bank, the RBI, would cut key policy rates by 50 basis points in early July.

Commenting on this, NS Venkatesh, MD & CEO, IDBI Gilts said, "The markets are expecting a cut in policy rates in the range of 50 to 75 basis point, after which there will be a prolonged pause on policy front."