1st LD Writethru: India's central bank keeps repo rate unchanged

India's central bank on Tuesday kept the benchmark repo rate unchanged at a five-year low of 6.5 percent.

Repo rate is the rate at which the Reserve Bank of India lends money to banks.

The central bank also kept the reverse repo rate and the cash reserve ratio unchanged at 6 percent and 4 percent respectively.

At the last bi-monthly monetary policy review, the Reserve Bank of India had cut the repo rate by 25 basis points.

In fact, the decision to keep key interest rates unchanged this time was on expected lines as retail inflation rose to 5.39 percent in April from 4.83 in March.

"The inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain," Reserve Bank governor Raghuran Rajan said in a statement.

He added "Incoming data show a sharper-than-anticipated upsurge in inflationary pressures emanating from a number of food items as well as a reversal in commodity prices."

The Reserve Bank has a target of cutting retail inflation down to 5 percent by March 2017.

Rajan indicated that rate cuts cannot be ruled out down the year, saying the stance of monetary policy remains "accommodative". Endit