The reverse repo rate was retained at 6.25 percent. Viral V. Acharya and Dr. Urjit R. Patel voted in favour of keeping the policy repo rate unchanged while Dr Chetan Ghate voted for an increase in the policy rate by 25 bps. Housing Development Finance Corp Ltd was down 1.8 per cent.
RBI had announced hikes for two times in a row during current fiscal and most of the analysts expected the third one amid the sliding rupee and rising bond yields.
"The MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 per cent on a durable basis", the resolution of the MPC after a three-day meet said.
India's wholesale inflation fell to a four-month low of 4.53 per cent in August on softening of food prices. "The government welcomes the MPC's assessment and notes its decision to maintain the policy rate", the statement said. Rapid industrialisation under the Modi government continues to bear fruit as industrial production accelerated in June-July, mainly due to consumer durables, notably two-wheelers, readymade garments, stainless steel utensils, auto components and spares, and accessories. "In the near term, the rupee might trade in 72.50 and 73.80 range", Rushabh Maru - research analyst of Anand Rathi Shares and Stock Brokers, said.
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As per the RBI panel, the hike in minimum support price (MSP) for Kharif crops, rising crude oil prices and uncertain global financial environment may hamper inflation.
Defending the decision, the bank said it was acting "to further strengthen domestic macroeconomic fundamentals".
If the RBI does raise rates, it would be the latest in a series of emerging market central banks that have been pressured into tightening policy in response to a tumbling currency. But the status quo in the policy has disappointed.
There were expectations that hiking interest rates could slow rapid inflation in the country. The RBI didn't. This has real estate wondering whether it is just a bit of bother - or are we looking at an incomplete picture, and can expect to see something new in the coming days.
The central bank will be looking out for September inflation data due on Friday, after it raised benchmark rates last week and said it was open to further tightening.