India's central bank leaves key rates untouched

Mumbai, Oct 24 (IANS) The Reserve Bank of India (RBI) left key interest rates unchanged and projected an economic growth of 7.5-8 percent during the current fiscal in its mid-term review of the monetary policy here Friday.

'Aggregate supply conditions in the Indian economy have shown resilience in the second quarter of 2008-09 in the face of a deteriorating global macroeconomic and financial environment,' RBI Governor D. Subbarao said.

'There are, however, growing indications that the underlying economic cycle is turning in tune with global economic developments and that domestic economic activity is straddling a point of inflexion,' he added.

The central bank governor, who reviewed the policy before chief executives of commercial banks, decided to leave all the interest rates untouched, even as the cash reserve ratio, or the minimum balance banks have to retain against deposits, was maintained at 6.5 percent.

"Keeping in view the supply management measures taken by the government and the lagged demand response to the monetary policy measures taken by Reserve Bank, it has been decided to maintain the earlier projection of inflation of 7.0 per cent by end-March 2009 for policy purposes."