RBI keeps key rates unchanged

Growth projection for 2018-19 has also been retained at 7.4%.

An Indian man (foreground R) sits outside the Reserve Bank of India (RBI) building in Mumbai on January 25, 2011. India on January 25 hiked interest rates to their highest level since early 2008, joining South Korea and Thailand in increasing borrowing costs this month, amid mounting concern about inflation across Asia. AFP PHOTO / Sajjad HUSSAIN

The Reserve Bank of India (RBI) decided to keep the interest rate unchanged at 6.5% in the fourth bi-monthly policy review while changing its stance to calibrated tightening from neutral.

The reverse repo rate has also been kept unchanged at 6.25%. The Cash Reserve Ratio (CRR) stands at 4% while the bank rate is at 6.75%.

The RBI said inflation was projected at 4% for Q2, 3.9 to 4.5% in H2, and 4.8% in Q1 of next financial year with risks somewhat to the upside.

Growth projection for 2018-19 has also been retained at 7.4%.

The monetary policy committee noted that headwinds from escalation trade tensions, volatile and rising oil prices and tightening of global financial conditions, pose substantial risks to growth and inflation outlook.

It also said it was imperative to further strengthen domestic macro fundamentals.

Exchange rate of rupee saw bouts of volatility since last policy, said RBI Chairman Urjit Patel.