Mumbai: The Reserve Bank of India has lowered its medium term expectations of inflation to 3 per cent levels as the wholesale price index-based inflation rate fell below the four per cent mark.

India''s inflation rate declined to 3.32 per cent in the week ended September 8 from 3.52 per cent a week earlier, and the lowest annual rise in five years.

"We are not worried about inflation," RBI governor Y V Reddy said in an interview to the BBC yesterday, adding the RBI is looking at a medium term objective of 4-4.5 per cent and ideally toward three per cent.

"We have to be concerned about the developments on the inflation front: that is our main responsibility," he said.

He said while the recent interest rate cut by the US Federal Reserve would be used as a "relevant input" in the ongoing analysis of economic and monetary developments, it is unlikely to affect RBI''s policy decisions to any great extent as India is essentially a domestic economy-dominated system.

"Our major considerations relate to domestic developments. But naturally, since we''re increasingly getting integrated with the rest of the world, increasing weight is given to global developments, in particular developments in the United States."

RBI is due to announce its mid-term review of the annual credit and monetary policy on October 30. Some analysts expect the central bank to relax interest rate curbs fell to 3.32 per cent.