New Delhi: Prime Minister's economic panel expects interest rates to come down in the coming weeks following the decisions taken by the Reserve Bank to various key policy rates during the month.

"I expect the inflation and interest rates to go down in the next few weeks", PM s Economic Advisory Council Chairman Suresh Tendulkar told reporters after RBI unveiled its mid-term credit review policy.

And that is why the liquidity situation is being eased, he said, adding lowering of interest rates is something that would keep growth on path in 2009-10.

Though RBI had not taken any major initiatives during the policy review today, it had earlier reduced the mandatory deposit that banks keep with the central bank by 250 basis points unlocking Rs 1 lakh crore, in addition to lowering the short-term lending (repo) rate by 1 per cent.

Commenting on today s policy announcement, Tendulkar said, "they have changed the repo rate last week and it is too early to change the rates now.

Pointing out that slowdown of the economy is inevitable, he said, "I think some slowdown is to be expected.

The PMEAC also projected 7.7 per cent. I think slowdown under the current circumstances is something which is inevitable. The thing is not to let it go much below 7 per cent."

On fiscal deficit, the panel is of the view that it would not go much beyond estimated earlier.

"I don t think it won t very much beyond that. It may come down, our assessment was based on international commodity prices ruling then. They have been coming down. Clearly, it would not go beyond that," he said.
Source : PTI