India's central bank kept its key interest rate on hold Thursday, warning that inflation remains a risk despite slowing growth in Asia's third largest economy. In a separate announcement, India's Finance Ministry projected that growth next fiscal year would pick up to 7.6 percent. It said growth for the fiscal year ending in March would be 6.9 percent, one of the worst performances in the past decade. RBI kept its short-term lending rate unchanged at 8.5 percent. The cash reserve ratio, which regulates the proportion of deposits banks must hold as reserves, was held at 4.75 percent. The bank slashed the reserve ratio by three quarters of a percentage point last week. The bank warned that high oil prices and India's growing budget deficit are adding to inflation pressures, even as a sluggish global economy, particularly in Europe, threatens growth.
