M A I N   N E W S

No hike in interest rates for now: RBI
Shiv Kumar/TNS

Mumbai, December 16
The Reserve Bank of India (RBI) today kept key interest rates unchanged after as many as 13 successive hikes since March 2010.

The central bank sounded a persistent note of warning on soaring inflation during its mid-quarter policy review. It also expressed concern at slowing growth. RBI Governor D Subbarao indicated that the bank might even reduce rates in the near future as economic growth showed signs of flagging in the face of a tight monetary policy.

"While inflation remains on its projected trajectory, the downside risks to growth have clearly increased," the RBI said in a statement.

Announcing the policy, the central bank said it was maintaining the repo rate (at which banks borrow from the RBI) at 8.5% and the reverse repo rate (at which the RBI borrows from banks) at 7.5%. Contrary to expectations that it would reduce the cash reserve ratio (CRR), the amount banks need to park with it, the RBI decided to maintain it at 6%.

According to the RBI, India's economic growth has slowed to 6.9% in the July-September quarter. Inflation has shown signs of cooling with the annual rate of inflation falling to 9.1% in November. Food inflation has fallen to 4.35% for the week ended December 3.