Subbarao says action to be taken at right time

The Reserve Bank is continuously monitoring the liquidity situation and would decide on its future course of action on interest rates at an appropriate time, Guv Subbarao said.

The Reserve Bank is continuously monitoring the liquidity situation and would decide on its future course of action on interest rates at an appropriate time, Governor D Subbarao said on Tuesday.

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"We are hearing what everyone is saying and the decision will be taken at an appropriate time," Subbarao told reporters after his meeting with Finance Minister P Chidambaram, when asked whether the RBI was mulling further rate cuts.

Subbarao is believed to have discussed the current liquidity situation in the country's banking system at a meeting with the Finance Minister here, where private sector banking giant ICICI Bank CEO and CII President KV Kamath was also present.

"The RBI is constantly and continuously monitoring the situation," the RBI Governor said.

Asked if ICICI Bank would cut interest rates, Kamath said that interest rate "is a play of demand and supply".

"Nobody has asked us to cut interest rates. I am among the first to say that interest rates have to decline ... Confidence in business has to come back," Kamath noted.

"The meeting considered certain steps and the RBI will look at them... Various methods of injecting liquidity through the repo and reverse repo (short-term) rates were discussed," Kamal Nath said.