Defying market expectations, the Reserve Bank of India on Monday left untouched key interest rates, including the bank rate, even as it revised upwards the GDP growth rate to 6.5-7 per cent for 2003-04 against 6 per cent projected in April.

The bank rate at 6 per cent, repo rate and cash reserve ratio at 4.5 per cent remained unaltered.

• RBI's Monetary and Credit Policy: Complete Coverage

Releasing his maiden mid-term Monetary and Credit Policy, RBI Governor Y V Reddy said the Monetary Policy stance would continue to make provisions of adequate liquidity to meet the credit growth and would support investment demand.

There will be a vigil on the price level with preference for soft and flexible interest rate environment, he said.

Projecting an inflation rate of 4-4.5 per cent with a possible downward bias as compared to earlier projection of 5-5.5 per cent, he said the outlook remains benign.

The RBI would, however, continue to closely monitor the price behaviour leaving no room for complacency on inflation front, Reddy said.

He said on the current reckoning, based on growth prospects across the sectors of the economy, and assuming the continuance of good performance in industry and some acceleration in exports, reflecting the anticipated global economic recovery, it is reasonable to expect an overall GDP growth of 6.5-7 per cent.

Expressing concern over the large scale borrowings by central and state governments, Reddy said fiscal deficit as at end-September is higher compared to last year.

PTI