State-run Union Bank of India said it has cut base rate by 10 basis points to 10.65 percent, becoming the first Indian bank to do so this year, signaling interest rates may start softening in the economy. India\'s main policy rate is at its highest since July 2008 after the central bank raised rates 13 times since March 2010 to rein in high inflation. \"Credit growth is not very high and interest rates have peaked so we thought it is a good time (to pass on the benefit),\" M. V. Nair, chairman and managing director of the bank, told Reuters. Indian banks\' loans have grown 7.4 percent in the current financial year so far, compared with nearly 11 percent last year. The Reserve Bank of India (RBI) has set a loan growth target of 18 percent for the year.\"We have to see the signal that Reserve Bank gives but rates coming down will be very gradual. It may stand steady one or two quarters,\" Nair told CNBC-TV18, when asked whether he sees a 50-60 basis points fall in lending rates by March. Pausing its interest rate tightening in its policy review on Dec. 16, the central bank signalled a shift in its focus to growth from fighting inflation. \"From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth,\" the RBI said in a statement.The RBI\'s third-quarter policy review of the monetary policy is on Jan 24. Last week, RBI Governor Duvvuri Subbarao said the economy is poised to miss the central bank\'s growth forecast of 7.6 percent for 2011/12 ending in March. The government this month said it expected GDP to grow by 7.25 to 7.75 percent this year, down sharply from a February estimate of 9 percent. Analysts were, however, skeptical other banks will take a cue from Union Bank\'s move. \"I\'ll be surprised if other banks follow. Union Bank is too small to force others to move and 10 basis points is hardly anything,\" said Krishnan A.S.V, analyst with brokerage Ambit Capital. The bank\'s shares, valued at $1.6 billion, rose as much as 4.3 percent after the announcement. The stock ended 2.8 percent higher at in a Mumbai market that was down 1.17 percent.