Global credit rating agency Moody's Investors Service on Tuesday said the Reserve Bank of India (RBI) has decided to keep the policy rate at 7.25 percent and evaluate the impact of 75 basis points of interest rate cuts in 2015.
In a statement Moody's said: "The central bank has successfully reined in medium-term price expectations in recent quarters, and there are a number of reasons for maintaining a neutral policy stance, including the recent uptick in headline consumer price inflation and external risk factors, such as the likely commencement of interest rate hikes in the US."
According to Moody's, the trends in monsoon rainfall and global crude oil prices, coupled with the domestic economy's ability to absorb US Federal Reserve tightening, will determine whether additional monetary easing is forthcoming later in the year.