RBI Governor Raghuram Rajan, who has for the third time in a row kept the rate unchanged, said there are upside risks to inflation in view of uncertain monsoon and its impact on food production as also volatile international oil prices.
"It is...Appropriate to continue maintaining a vigilant monetary policy stance as in June, while leaving the policy rate unchanged," he said third bi-monthly review of the monetary policy here.
In order to infuse additional liquidity, Rajan decreased SLR for banks by 0.50 per cent to 22 per cent with effect from the fortnight beginning August 9. A similar move in June had released an additional Rs 40,000 crore into the system.
Additionally, Rajan also said that RBI will continue to provide liquidity under overnight repos at 0.25 per cent and liquidity under the 7 and 14 day repos of up to 0.75 per cent of net demand and time liabilities.
This warrants a "heightened state of policy preparedness," he said, adding that supply will increase with the government measures on food management and project completion.
Stock markets fell when the policy was announced at 1100 hrs, but showed upward movement thereafter. The BSE's 30-stock index, Sensex, was trading in the green, up 0.22 per cent from the previous close, at 1138 hrs.