Reserve Bank of India (RBI) kept interest rates unchanged but said food prices and falling currency pose inflationary risks.

The current account deficit hit 5.4% of GDP in the April-December period, exacerbating pressure on the rupee.

The central bank left its policy repo rate unchanged at 7.25% and kept the cash reserve ratio (CRR), or the share of deposits banks must keep with the central bank, steady at 4% despite some signs of moderating inflation in recent months.

"It is only a durable receding of inflation that will open up the space for monetary policy to continue to address risks to growth," the RBI said in a statement.

Jyothi Shankaran

    Jyothi’s last role was as Senior Editor with the business news channel Bloomberg TV India. He also worked as News Editor at business-standard.com, the online version of the business newspaper Business Standard. Jyothi is a chemical engineer from the Regional Engineering College, Srinagar.