Mumbai: The Reserve Bank of India (RBI) left its key short-term interest rates unchanged at a policy review on Tuesday so as to assess the impact of its recent aggressive easings, but cut its growth forecast for the fiscal year ending March.
The RBI left its lending rate steady at 5.5 per cent and its reverse repo rate, at which it absorbs cash from the banking system, unchanged at 4.0 per cent.
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 per cent.
The RBI said given a slowdown in industry and services and assuming normal agricultural production, it was cutting its GDP growth projection for 2008/09 to 7.0 per cent with a downward bias from 7.5-8.0 per cent.
The economy has grown at 9 per cent or more for the past three fiscal years. Earlier, this month, the central bank slashed its short-term rates by 1 per centage point. A 50 basis point cut in the CRR also took effect in January as it moved to stem the slowdown in Asia's third-largest economy. The bank rate, used to price long-term loans, remained at 6.0 per cent.
A Reuters survey last week showed 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 Oct. 20 as the global financial crisis hurt business sentiment and slashed demand.
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