Reserve Bank of India Keeps Rates Unchanged

The Reserve Bank of India (RBI), India's central bank, kept key lending rates unchanged on Monday, June 18, 2012. The re-purchase rate remains unchanged at eight percent, which automatically keeps the reverse re-purchase rate at seven percent.

The RBI said the role of interest rates in the current slowdown is relatively small, and that a rate cut at this stage could exacerbate inflationary expectations.

It said the "evolving growth inflation dynamic" will continue to influence its stance on rates.

Only three of 16 economists polled had predicted the rate pause, while the rest had expected a rate cut.

The rate pause follows a 0.50 percentage point cut in April, the first step toward unwinding the 3.75 percentage points of rate increases that the RBI carried out between March 2010 and October 2011.

The RBI Monday left the cash reserve ratio, or the percentage of deposits that banks must park with the RBI, unchanged at 4.75%.