Duvvuri Subbarao, the governor of the Reserve Bank of India has said that inflation in the country must come down for considering any cuts in the interest rates by the central bank.

We are deeply sensitive in making India a low interest- rate regime but that will take time. First, we need to bring inflation down in order to bring interest rates down,” said Subbarao. He said that the several developing economies are now more focused on generating growth instead of fighting high inflation due to the struggling US economy.

Eh high inflation in India is sustaining pressure for higher borrowing costs even as there is a fall in consumer demands. Even as there are indications that demand has come down in the country, the central bank cannot reduce rates s yet because of high inflation rate.

“Whether we will be pausing the hikes or whether we will be continuing with hiking, it’s not clear,” Subbarao said. He added that he will hold discussions with experts and announce his decisions in this month’s policy review.

The country’s government has identified high inflation as the biggest challenge to sustainable economic growth and the central bank carefully scrutinizes market trends to determine changes in interest rates.