"The current assessment of the macroeconomic outlook and the overall stance remains broadly unchanged from the annual statement made in April 2005," RBI said in its first quarterly review of the annual policy released today.
It kept the economic growth rate and inflation estimates unchanged at around 7% and 5-5.5%, respectively.
The central bank did not change the bank rate from 6% and the reverse repo rate from 5%. The repo rate was hiked by 0.25% in April.
"There are several global uncertainties but there are domestic factors that indicate a confidently growing economy in a stable environment," the statement said.
"While global factors are becoming increasingly significant for india, domestic factors still dominate and point to favouring stability to maintain the growth momentum.
"The overall industrial growth has maintained a healthy uptrend, though the delayed monsoon has imparted some uncertainties to the likely level of agricultural production. The non-food credit growth has been buoyant and broad-based," the statement said.
On overall inflation trends, the central bank said the current level of inflation remains moderate, both at the wholesale and retail level. The inflationary outcome turned out consistent with anticipation at the beginning of the year and underlying inflation remains contained. However, the pass-through of oil prices is not yet complete, the apex bank added.
RBI said despite higher credit growth, the goverment borrowing programme has been conducted smoothly. The bank deposit growth was higher and non-bank financial institutions' demand for the government remained positive.
"The competing demand for funds between the government and the commercial sector has been balanced. This was facilitated by refocussing operations in favour of commercial sector relative to the government, duly supported by appropriate liquidity management," RBI said.
The money supply growth has been within the projected trajectory. The reserve money growth has been driven by expansion in domestic assets rather than foreign assets, RBI said.
The domestic financing conditions remain supportive of growth and liquidity needs of the economy have been met by unwinding of liquidity in an orderly manner though its overhang continues to be substantial, it said.