New Delhi: C. Rangarajan, chairman, Prime Minister's Economic Advisory Council, on the Reserve Bank of India's Annual Monetary Policy Statement for 2012-13 (Apr-Mar).

I think banks will react to this policy decision in the spirit in which the RBI has made the rate change. Earlier, they had (reduced) the CRR and that had provided liquidity to banks. Therefore, I feel that banks would be inclined to follow the lead that has been given by RBI. I expect a reduction in banks' lending rate very soon.
   
Core inflation has fallen below 5 percent. Perhaps inflation may not necessarily fall further in a significant way. Therefore, until that happens, one should not expect further reduction in interest rates.
   
By doing a 50 basis points repo cut, they have clearly given an indication that further rate cuts will entirely depend on inflation.
   
I think the rate of growth of economy in the current fiscal will be close to 7.5 percent. As far as the growth trend is concerned, India can grow 8-9 percent.

(Agencies)