The Reserve Bank of India (RBI) left its key short-term interest rates unchanged at a policy review on Tuesday. RBI did this in order to assess the impact of its recent aggressive easings, but cut its growth forecast for the fiscal year ending March .
The Reserve Bank of India (RBI) left its lending rate steady at 5.5 percent and its reverse repo rate, at which it absorbs cash from the banking system, unchanged at 4.0 percent.
The RBI also kept the cash reserve ratio (CRR) , the amount of funds banks have to keep on deposit with it, unchanged at 5.0 percent.
The RBI said given a slowdown in industry and services and assuming normal agricultural production, it was cutting its GDP growth projection for 2008-2009 to 7.0 percent with a downward bias from 7.5-8.0 percent. The economy has grown at 9 percent or more for the past three fiscal years.
In the beginning of January 2009, the RBI slashed its short-term rates by 1 percentage point. A 50 basis point cut in the CRR also took effect in January as it moved to stem the slowdown in Asias third-largest economy.
The bank rate remained at 6.0 percent. According to a Reuters survey last week , the central bank was tipped to hold interest rates steady although a sizeable minority of analysts polled by Reuters had bet on yet another cut.
The RBI has cut its short-term lending rate by 350 basis points in four steps since October 20 as the global financial crisis hurt business sentiment and slashed demand.
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