"The tension between growth and inflation has been a complex one to manage. Growth moderation suggested that we ease the monetary policy stance. But on the other hand, stickiness on inflation did not allow any room for such easing," Subbarao told reporters at the customary post-policy interaction.
In the first quarter review announced earlier in the day, the RBI retained the repo rate at 8 per cent and the CRR at 4.75 per cent, but chose to lower the SLR by one per cent to 23 per cent.
He said the RBI chose to cut the SLR (statutory liquidity ratio) rather than the CRR (cash reserve ratio) as it wants a shift in banks' portfolios from the government to the private sector.
Explaining the thinking at the Mint Road, Subbarao said: "Monetary policy action alone will not deliver the macro- economic stimulus that we want. (For growth,) there are certain things that need to be done. When those are resolved, we will adjust our monetary policy stance".
When asked about the possibility of a rate cut this calendar year, Subbarao said: "RBI will not go entirely by the inflation projection, it will go by a number of figures as well as how the risk factors might unfold".
On factors that can revive growth, Subbarao said: "Some tangible, credible action on fiscal deficit certainly would revive investment sentiment, but there are other things to be done as well." (MORE)