India's central bank kept interest rates unchanged Tuesday, saying most commercial banks have yet to pass on two previous cuts to customers in Asia's third largest economy. After meeting in the financial capital Mumbai, the Reserve Bank of India (RBI) said the benchmark repo rate - the level at which it lends to commercial banks - would remain unchanged at 7.50 percent.
The RBI's decision to hold rates had been widely anticipated by economists who said it would remain cautious due to inflation concerns, including the impact on food prices of crop damage from earlier than expected rains.
Rising food prices are a critical issue in India where even minor increases cause hardship for its tens of millions of poor.
But RBI governor Raghuram Rajan said the decision was also based on the fact that commercial banks have been reluctant to lower their own lending rates.
The RBI has already cut rates twice this year in an attempt to encourage lending to businesses and boost economic growth to help create jobs for millions of young people.
But only a few of India's banks - saddled with bad loans and seeing lower profits - have passed them on to customers.
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