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India central bank keeps interest rate unchanged

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December 18, 2013 12:48 AM EST | AP


MUMBAI, India (AP) — India's central bank has surprised many by keeping its key interest rate unchanged despite the worrying rise in inflation.

The Reserve Bank of India held the benchmark rate at which banks borrow from the central bank steady at 7.75 percent. It had been widely expected to raise the rate for a third month in a row after November inflation rates were worse than expected.

However, the bank also is walking a tightrope in its monetary policy because raising interest rates too high could weigh down already sluggish economic growth, which hit a 10-year low earlier this year before improving somewhat. Still, the economic expansion of 4.8 percent for the July-September quarter is far below the average 8 percent growth India saw for the past decade.