Reserve bank of India Governor Dr. Yaga Venugopal Reddy had reviewed the market changes in the last few days and announced interest rates will be unchanged that be rewarded as “Standstill policy”. Cash ratio and CRR repo and reverse repo rates and bank rates will be changed in the upcoming days. Reserve repo at 6% and CRR at 7.5 % and the inflation target for 07-08 also remain at 4 to 4.5 % levels and 3% in medium terms. For maintaining the price stability RBI keep it self away from hawkish stance and second quarter credit policy unveiled on Tuesday. GDP forecast has reached at 8.5%. The repurchase rate was held at 7.75 percent, the Reserve Bank of India said in a statement in Mumbai today. The Reserve Bank of India left its reverse repurchase rate, or the overnight borrowing rate, at 6 percent and the cash reserve ratio, or the proportion of deposits banks must hold as reserves, at 7.5 percent. Reddy makes the decision himself after consulting with senior central bank officials.

NEW DELHI (Reuters) - Finance Minister Palaniappan Chidambaram said on Tuesday the Reserve Bank of India’s decision to leave all interest rates unchanged at a review marked a "standstill" policy that could be calibrated later to meet global developments.

Chidambaram said the government would discuss with the RBI further policy actions that could be taken at the next review in April.

"Developments in global financial markets in the context of the subprime crisis would warrant more intensified monitoring and swift responses with all available instruments to preserve and maintain macroeconomic and financial stability," the RBI official statement .

Downfall in the interest rates in US makes the Indian market to complicate the monetary and currency management by Indian rupees and exports rise. So there are some restrictions are necessary in the the context of the management of volatile and large movements in capital flow.

Apart from monitoring forex flows , market sources not ruled out forex flows and reversal on global sentiment. RBI governor warned banks for not lowering interest rates despite of easy easy liquidity conditions and the fact that credit has moderated.

“Usually most banks see hardening of rates in the last quarter (Jan-Mach) of the year, but the fact that it has not happened this year means that banks have taken into account the liquidity positions. RBI’s response is a measured one given the uncertainties in the global. It has to take note of inflation but at the same time it also has to keep liquidity in mind. Most banks will watch their liquidity positions in the February-March timeframe and go in for interest rate re-structuring only in the next quarter,” said Chanda Kochhar, Joint Managing Director, ICICI Bank.

The rupee stood at 39.39/40 per dollar, holding steady after the Indian central bank's decision, while the yield on the 10-year benchmark bond rose 2 basis points to 7.52 per cent.

Given the RBI’s decision to leave the rates untouched on Tuesday, the interest rate differential between India and the United States widened to 4.25 percentage points, its widest in three years, after the Fed slashed the fed funds rate last week. The Fed is also expected to make a further cut in rates on Wednesday.