Tuesday, 30 October 2012 16:36
MUMBAI: India's central bank kept its benchmark interest rate on hold on Tuesday due to inflationary pressures, disappointing government and business leaders who wanted a cut to boost the economy.
The Reserve Bank of India kept the key repo rate -- at which it lends to commercial banks -- at 8.0 percent, as had widely been predicted by economists.
"The persistence of inflationary pressures even as growth has moderated, remains a key challenge," RBI governor Duvvuri Subbarao said after the policy review in Mumbai.
"Managing inflation and inflation expectations must remain the primary focus of monetary policy," he added in a statement.
The lack of a rates cut offered little cheer to the government after the Indian economy grew at just 5.5 percent in the quarter to June -- down from near double-digit rates between 2005 and 2011.
"Growth is as much a challenge as inflation. If government has to walk alone to face the ...