India’s central bank kept its key interest rate on hold Tuesday as analysts had expected, resisting government pressure for a fourth cut of the year.
The Reserve Bank of India (RBI) said the benchmark repo rate -- the level at which it lends to commercial banks -- would remain at 7.25 per cent.
“It is prudent to keep the policy rate unchanged at the current juncture while maintaining the accommodative stance of monetary policy,” RBI governor Raghuram Rajan said in a statement following the bank’s monetary policy review meeting in Mumbai.
Rajan had already snipped rates three times this year to aid India’s economy, which at 7.5 per cent growth outperformed China’s for the first three months of 2015.
Prime Minister Narendra Modi’s business-friendly government was keen for a further cut as it seeks to quicken the pace of growth in Asia’s third-largest economy.
But Rajan has insisted that any further reduction would have to wait until the inflationary effect of annual monsoon rains is known in a couple of months time.