Reserve Bank of India Governor Raghuram Rajan kept the key interest rates unchanged at his final meeting on Tuesday.
The RBI maintained its benchmark lending rate, the repo, at 6.50 percent. Consequently, the reverse repo rate was retained at 6.00 percent.
The repo rate, which is now at the lowest since early 2011, was previously lowered by a quarter-basis point in April. The bank has cut rates by a cumulative 150 basis points since 2015.
The cash reserve ratio was also kept unchanged at 4 percent as expected.
The RBI said it is appropriate to keep the policy repo rate unchanged at this juncture, while awaiting space for policy action. The monetary policy stance remains accommodative and will continue to emphasize the adequate provision of liquidity, the bank added.
According to RBI, risks to the 5 percent inflation target for March 2017 continue to be on the upside. Also, the bank maintained the growth projection for 2016-17 at 7.6 percent.
Looking forward, the growth momentum is forecast to quicken on the back of normal monsoon as it raises agricultural growth and rural demand. The passage of the Goods and Services Tax (GST) Bill augurs well for the growing political consensus for economic reforms, the bank noted.
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