RBI holds key lending rates; Repo rate stays at 6.5%

The Reserve Bank of India (RBI) on Friday maintained its key benchmark lending rates but changed the policy stance to "calibrated tightening" from "neutral" in its fourth bi-monthly monetary policy review of 2018-19.

The outcome is in contrast to many analysts and bankers, who were expecting the six-member Monetary Policy Committee to go at least for a 0.25% hike in key rates at the review.

"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.

The repo rate, at which the RBI lends to the system, will continue to be at 6.5% and the reverse repo at which it absorbs excess funds will be 6.25%.

The recent excise duty cut by the government on petrol and diesel will help contain inflation, RBI Governor Urjit Patel, who headed the MPC, said.