The Reserve Bank of India left its short-term rates and banks’ cash reserve requirement unchanged as expected on Tuesday and stressed that nurturing growth remains its priority as the economy recovers from the global downturn.
“It is worth reiterating that the Reserve Bank will maintain an accommodative monetary stance until there are definite and robust signs of recovery,” it said in its review.
The Reserve Bank of India (RBI) left its lending rate steady at 4.75 per cent,its lowest in nine years,and its reverse repo rate,at which it absorbs surplus cash from the banking system,unchanged at 3.25 per cent.
Both rates,introduced in 2000,were last cut by 25 basis points in its April review.
The RBI also kept the cash reserve ratio,the amount of funds banks have to keep on deposit with it,unchanged at 5.00 per cent. It was last cut by 50 basis points in January.
The bank rate,used by banks to price long-term loans,remained at 6.0 per cent.
Analysts polled by Reuters last week expected the central bank to hold key rates steady as growth begins to show some signs of revival while concerns about rising prices were seen deterring further cuts.
Of 25 analysts polled,22 expected no rate change while three had forecast a 25 basis-point cut in both rates.
The RBI has cut its short-term lending rate by 425 basis points in six steps since October to support growth. The reverse repo rate,at which the central bank absorbs surplus cash,has been cut by 275 basis points in four steps since December.