We are not ruling out a rate increase - D.Subbarao

.....Textbook economics says central banks take policy decisions based on inflation expectations and not the prevailing level of inflation. You seem to be very hawkish when it comes to inflation expectations and yet you have gone for a deep rate cut. Is there a disconnect?

I don’t believe so. We have looked at inflation numbers and how much they have traversed from their highs. You must remember that we had done our last rate hike in October 2011, when headline inflation was 10% and core inflation was above 8%. We have to recognize that there has been a significant drop both in headline and core inflation numbers, and we also have said that over the last one-and-a-half years, our bias has shifted from inflation towards growth.......

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