India's central bank kept interest rates on hold Thursday due to soaring inflation, even as the government's annual budget announcement last week raised little hope of an economic revival. The Reserve Bank of India (RBI) said the benchmark repo rate - the level at which it lends to commercial banks - would remain unchanged at 5.15 percent, a nine-year low.
Inflation in Asia's third-largest economy surged to 7.35 percent in December, far above the four percent target set by the bank's monetary policy committee (MPC), and driven up by a rise in the price of onions and other essential items. "The outlook for inflation is highly uncertain at this juncture.
On the other hand economic activity remains subdued. Given the evolving growth inflation dynamics, MPC felt it appropriate to maintain status quo," the central bank said in a statement.