The Reserve Bank on Tuesday kept the key rates unchanged and said there are progressive signs of economic recovery but warned that the overall scenario continued to be uncertain with fiscal consolidation posing a challenge.
In its quarterly review of the monetary policy, the Reserve Bank while keeping the repo and reverse repo rates unchanged, retained economic growth projection at 6 per cent with an upward bias in current fiscal.
The policy, in line with the expectations of the bankers, however, said that there are progressive signs of recovery with increased food stocks, positive industrial production and optimistic business confidence.
However, it added, there are some negative signs like delayed and deficient monsoon, food price inflation, rebound in global commodity prices, continuing weak external demand and high fiscal deficit.
RBI expects inflation to scale up to around five per cent by March 2010.