India's central bank keeps key rates unchanged

Posted 01 30 2008 11:37AM

MUMBAI (AFP) - India's central bank on Tuesday held key interest rates steady in its latest policy review, saying the risks of higher inflation had increased globally.

The Reserve Bank of India kept its repo rate -- the lending rate to banks -- unchanged at 7.75 percent and the amount of cash banks must set aside as reserves at 7.50 percent.

Analysts had expected the central bank to shift from a hawkish stance in place since 2004 to a neutral outlook or perhaps even cut rates in the wake of a hefty US interest rate cut last week.

"The unfolding of global developments in recent weeks and responses of monetary banks indicate that the threat to growth and financial stability worldwide persist," central bank governor Y.V. Reddy said in a statement.

"The upside pressures on inflation have become potent and more real," he added.