RBI leaves rates unchanged: Highlights

The Reserve Bank of India (RBI) on Monday kept the key policy rates unchanged in its mid-quarter monetary policy review, warning of upward risks to inflation posed by a falling rupee and increases in food prices.

The central bank had cut rates in the previous three reviews.

As expected, the RBI left the repo rate unchanged at 7.25 per cent and cash reserve ratio (CRR), or the share of deposits banks must keep with the central bank, steady at 4 per cent, despite falling inflation in recent months.

The BSE Sensex was trading at 19,115.43 soon after the RBI's announcement - down 62.50 points or 0.33 per cent. At the same time, the Nifty was trading 32.60 points, or 0.56 per cent, lower at 5,775.80.

HIGHLIGHTS:

> Repo rate to remain unchanged at 7.25 per cent
> CRR to remain unchanged at 4 per cent
> Weakening rupee, increase in MSP a risk to inflation
> Weak rupee to have some impact on prices
> Rainfall distribution over the next three months crucial
> Trade gap increase due to surge in gold imports
> Expect gold imports to moderate in June
> Continued fiscal consolidation may cut risk of twin deficits
> Continuing weakness in manufacturing needs to be urgently reversed
> Govt should create conducive environment for private investment, improve project clearances to promote growth
> Durable receding of inflation will open space for monetary policy action
> Reducing CAD is a challenge; RBI pitches for stable foreign inflows to finance it
> Steps to curb gold imports, easing commodity prices to lower CAD in 2013-14
> Balance of payments, inflation and growth rate to determine future monetary stance
> Need to be vigilant about global uncertainty and its impact on capital flows
> RBI ready to use all available instruments to deal with any adverse development in external sector
> Positive rating action should have favourable impact on investor confidence
> First quarter review of policy on July 30.

PMEAC Chairman C Rangarajan on RBI action:

> Current account gap, rupee fall restraining central bank's action
> Good rains could moderate food inflation
> Global factors will determine rate cut in July
> Have to assess the economy to decide on RBI action in the future