The Reserve Bank of India on Tuesday left its main lending rate unchanged at a five-year low, citing rising inflation, during what was outgoing Governor Raghuram Rajan’s last monetary policy meeting.
Mr. Rajan, who will leave the central bank when his three-year mandate expires in September, kept the repurchase rate, at 6.5%. This matches the prediction of nine economists polled by The Wall Street Journal last week.
Mr. Rajan cited India’s consumer-price index, which rose to a 22-month high in June on higher food prices.
“In view of this configuration of risks, it is appropriate for the Reserve Bank to keep the policy repo rate unchanged at this juncture, while awaiting space for policy action,” Mr. Rajan said in a statement. “The stance of monetary policy remains accommodative.”
A rise in consumer and wholesale prices since the RBI’s last monetary policy meeting in June has surprised analysts. However, India’s ongoing monsoon–expected to be the most abundant in at least three years–promises good harvests, which should help cool prices.