RBI Deputy Governor Subir Gokarn today said interest rates are unlikely to rise further

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but the Reserve Bank of India may intervene in the forex market because of the rupee volatility, according to media reports.

The equation between growth and inflation in India has become much more balanced in the last few months and interest rates were unlikely to rise further, CNBC quoted Gokarn as saying in an interview.

"Growth risks obviously have come back into a much larger consideration based on what we've seen in the past few months," CNBC quoted Gokarn as saying.

The monetary policy had "reached the peak of the cycle", said Gokarn, who had addressed a regional outlook forum by Institute of South East Asian Studies of Singapore.

He said RBI would intervene in the forex market to reduce volatility in the rupee exchange rate, rather than to defend a particular rate.

The rupee had stabilised in recent weeks and was trading much closer to the real effective exchange rate against a basket of currencies tracked by RBI, he said.

The next level of exchange rate would depend on the foreign capital inflow which calls for boosting investor confidence by addressing the country’s fiscal deficit and infrastructure problems.

The rupee has fallen 16 per cent against the US dollar during the past year despite RBI’s intervention through state banks, according to reports.