New Delhi : The Reserve Bank of India left its policy interest rate unchanged on Tuesday, as expected. It also said that it does not expect further near-term policy tightening if headline inflation continues to ease towards the bank's targeted level.
The RBI kept its key repo rate at 8.00 percent, in line with the forecast of all 53 economists in a Reuters poll last week. Since taking office in September, RBI Governor Raghuram Rajan has raised the repo rate three times by a total of 75 basis points.
India's consumer price index inflation eased to 8.10 per cent in February, near the RBI's January 2015 target of 8 percent, while the wholesale price index slowed to a 9-month low of 4.68 percent.
The RBI wants CPI inflation to ease further to 6 per cent by January 2016. "The Reserve Bank's policy stance will be firmly focused on keeping the economy on a disinflationary glide path," said Rajan.
"If inflation continues along the intended glide path, further policy tightening in the near term is not anticipated at this juncture," added more.
Rajan expressed concern about risks to growth in an economy expanding at under 5 percent, its slowest in a decade. He said growth in the fiscal year that began this month is expected in a range of 5 to 6 percent, with downside risks.
"Lead indicators do not point to any sustained revival in industry and services as yet," added Rajan. The RBI also reduced the availability of overnight funds from its repo window for banks and increased the amount that banks may borrow from its term repo window in a bid to reduce lenders' reliance on short-term central bank funding.
