By Swati Bhat and Sudipto Ganguly
MUMBAI (Reuters) -The Reserve Bank of India (NS:) (RBI) kept its key interest rate unchanged on Friday, citing still-high inflation and disappointing some investors who had bet on a cut after a sharp drop in economic growth in the July-September quarter.
The Monetary Policy Committee (MPC), which consists of three RBI and three external members, kept the repo rate unchanged at 6.50% for an eleventh straight policy meeting.
Four of six members of the rate panel voted for a status quo in rates.
The committee also retained its policy stance at “neutral”.
Price stability is important to people because it impacts their purchasing power, said RBI Governor Shaktikanta Das.
The central bank sees economic growth as resilient despite the recent decline in growth rates, Das said.
Not withstanding the recent aberrations in growth and inflation, domestic conditions are on a balanced path, he said.
India’s annual retail inflation rose to 6.21% in October, breaching the central bank’s tolerance band for the first time in more than a year.
The country’s GDP growth fell to 5.4% in the July-September quarter, its slowest pace in seven quarters.
India’s benchmark yield rose 2 basis points to 6.7039% after the announcement, while the rupee was little changed at 84.6650 per U.S. dollar from 84.66. The benchmark equity indexes deepened their losses.
With the RBI holding rates, investors are now on watch for any measures by the central bank to ease the liquidity deficit in the banking system, which could help bring down market interest rates.
