New Delhi: Industry on Friday welcomed the RBI's move to keep key policy rates unchanged in its monetary policy review and said the central bank's commitment to address the slowdown in growth in future actions was reassuring.

"The RBI's guidance that monetary policy actions from now on will respond to the slowdown in growth is reassuring," CII Director General Chandrajit Banerjee said.

However, he asserted that the policy does not reflect the urgency of the situation, with industrial growth contracting and the investment outlook subdued.

"Given that the need for improving sentiments and to stimulate growth is urgent, the RBI could have used the current opportunity to send strong signals that growth will not be sacrificed further even while inflation is being controlled. In any case, inflation has started to soften, which is most welcome," Banerjee said.

In its policy review on Friday, the central bank maintained the repo rate (at which banks borrow from the RBI) at 8.5 percent and the reverse repo rate (at which the RBI borrows from banks) at 7.5 percent.

The halt in the RBI's monetary tightening drive comes after 13 hikes since March, 2010.

The RBI has also decided to retain the cash reserve ratio (CRR), the amount banks need to park with the RBI, at 6 percent. The industry was expecting a marginal cut in the CRR to induce liquidity in the system and promote investment.

The economic growth rate slowed to 6.9 percent in the second quarter of the current fiscal from 8.1 percent in the corresponding quarter of the previous financial year, even as inflation remained close to the double-digit mark.

A 5.1 percent contraction in industrial growth in October might also have prompted the RBI to maintain the status quo with respect to policy rates.

"The indications of a reversal in rate cycle (by RBI) is a welcome step and is a clear departure from the monetary tightening phase," FICCI Secretary General Rajiv Kumar said.

The decision to maintain the rates reflects the RBI's concern that core inflation rates are still hovering close to 8 percent. However, FICCI research shows that on a seasonally adjusted basis, inflation rates (in the non-food manufacturing segment) are tapering off, he added.

Industry body ASSOCHAM hailed the RBI's move, stating that it was "a very bold and appreciative step" to keep all the key rates unchanged till a clearer picture on inflation and inflationary expectations emerges.

"... The unchanged key policy rates and unchanged CRR is an indicator of the softening monetary policy instance. The slowdown in industrial growth and its impact on employment are of particular concern," ASSOCHAM President Dilip Modi said.

"The rupee has plunged to a record low, which will add price pressures. The government needs to take new policy initiatives to revive slowing growth and control inflation, as fiscal and monetary options are limited," he added.

(Agencies)