"Interest rate is a function of the monetary policy adopted by the Reserve Bank of India (RBI). When there is tightening of the monetary policy interest rates will also go up," he told PTI in an interview.

In the last one year the Cash Reserve Ratio (CRR) and Repo rate have been revised four times in order to tighten the monetary policy, Chidambaram said.

"Once inflation moderates and the RBI adopts a more accommodative policy, the interest rates will also decline. Interest rate is directly linked to inflation."

Asked if inflation was a matter of concern, he said, "It is. If inflation is a matter of concern. If inflation moderates, high interest rates will also moderate."

Asked what steps were being taken to carry out an assault on the price rise situation, the Minister said the government has taken a number of steps on fiscal, monetary and supply side to manage it.

"We will always be ready to take further fiscal, monetary and supply side steps as and when they become necessary," he said.