India's central bank keeps interest rates unchanged
India's central bank kept interest rates on hold Tuesday, citing rising inflation and "weakness" in Asia's third-largest economy despite recent growth. The move follows recent rate cuts designed to lower the cost of investing and boost India's economy, a key priority for Prime Minister Narendra Modi.
The Reserve Bank of India (RBI) said the benchmark repo rate, the level at which it lends to commercial banks, would remain at 6.75 percent as analysts had expected. "Indicators suggest the economy is in the early stages of a recovery, though with some areas of continued weakness," RBI Governor Raghuram Rajan said in a statement following the bank's monetary policy review meeting in Mumbai.
"The uptick of CPI inflation excluding food and fuel for two months in succession warrants vigilance," he added.
Rajan has made controlling inflation a priority, setting a target of bringing it consistently below six percent by January 2016 and to four percent for the 2016/17 financial year.
India's consumer prices rose five percent in October, below the target, but accelerating from a 4.41 percent increase in September.
“Inflation has turned up as anticipated, and is expected to rise further until December before plateauing," Rajan said in the statement.
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