MUMBAI: India's central bank kept interest rates on hold on Tuesday, citing inflation risks and noting a slowing momentum in growth in Asia's third-largest economy.
The Reserve Bank of India (RBI) said the benchmark repo rate, the level at which it lends to commercial banks, would remain at 6.75 percent as analysts had expected.
Out of 40 economists surveyed by Bloomberg News, all but two had predicted that the bank would leave the key rate unchanged.
"Although core inflation and wage growth are subdued, deflation risks appear to be receding," RBI governor Raghuram Rajan said in a statement following the bank's monetary policy review meeting in Mumbai.
"On the domestic front, economic activity lost momentum in Q3 of 2015-16, pulled down by slackening agricultural and industrial growth," he added.
Rajan has made controlling inflation a priority throughout his tenure. He had set a target of bringing it consistently below six percent by January 2016, which he said he expected to achieve, although the data has not been released yet.
India's consumer price inflation accelerated to 5.6 percent in December, the fifth month in a row that it had gained pace, but still below Rajan's target.
The bank chief lopped 125 basis points off borrowing rates in 2015 in four separate cuts to bring the repo rate down to its lowest level in four years.
It last cut rates on September 29 when it surprised analysts with an aggressive 50-basis-point reduction, before holding rates following a meeting in December.
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