"The inflation and interest rate cycles have peaked and have to come down and for that, the RBI will look at events like the Budget (2012-13), international crude oil prices and other variable factors to calibrate its policies," Subbarao said at the 'Global Summit on Changing Bihar'.
Defending RBI's decision to hike the Cash Reserve Ratio (CRR) and Repo rate at least 13 times since 2010, he said the measures were required to tame inflation which had significantly crossed the threshold levels.
The RBI Governor said that growth had to be sacrificed to bring inflation down below the threshold level.
On the overall health of the financial system, he said the financial system was soundly and prudently regulated to weather impact of global economic crisis even as "our economy was more globalized than we tend to acknowledge".
"However, it was due to sound and prudent monetary policy of the RBI that our country was by and large saved from the blues of global economic crisis and the savings of our people stood protected in contrast to their counterparts in the US and other Western countries," he said.
The RBI Governor, at the same time, said economic growth has to be sustained and for that abundant liquidity for credit and investment was required in the Indian economy.