Mumbai, Jun 18 (IANS): In a bid to control high inflation, the Reserve Bank of India (RBI) Monday kept key lending rates unchanged but said it is ready to provide relief in a turbulent global economic situation.

The move assumes significances as the RBI was expected to cut these key rates that would have translated in lowering of interest being paid by consumers on their loans for consumer durables, homes or automobiles.

Economic experts feel that the bearish consumer sentiment on account of high interest rates will continue.

However, the RBI said that though the economy is slowing down and that there is inflationary pressure, it will step in to pump more mony into the system when required.

"Management of liquidity remains a priority. Even as the liquidity situation converges to the comfort zone, the Reserve Bank will continue to use open market operations (OMOs) as and when warranted to contain liquidity pressures," the apex bank said in a statement.

"Recognizing that the global situation is turbulent, the Reserve Bank stands ready to use all available instruments and measures to respond rapidly and appropriately to any adverse developments."

The apex bank stressed that since the last rate cut, global macroeconomic indicators have deteriorated and that the headline inflation numbers are far above the comfort range.

"Since the RBI's annual policy statement in April, global macroeconomic and financial conditions have deteriorated. At the same time, the domestic macroeconomic situation too raises several deepening concerns."

By not cutting rates, the apex bank has shown resistance to the pressure that was being built on it to cut rates. The pressure was exerting following the recent data which showed that the economy is facing low growth.

As per the recent data released by the Central Statistics Office last week, India's industrial output grew marginally by 0.1 percent in April due to poor show of capital intensive mining and manufacturing sectors.

The factory output, measured in terms of the Index of Industrial Production (IIP), declined by 3.5 percent in March, the first such contraction in factory output since October 2011, when it shrank by 4.7 percent.

The manufacturing purchasing managers' index (PMI) for May suggested that industrial activity remains in an expansionary mode, and there is no question that the pace of expansion has slowed significantly.

However, the RBI cited that inflation continues to remain very high and much above the comfort level.

"While growth in 2011-12 has moderated significantly, headline inflation remains above levels consistent with sustainable growth. Importantly, retail inflation is also on an uptrend," the apex bank said.

Food inflation re-entered the double-digit zone after a gap of six months in April 2012 and the trend continued in May.

Food inflation rose to 10.74 percent in May as compared to 8.25 percent in the previous month as vegetables, pulses, milk, eggs, meat and fish became costlier, pinching the pockets of common people.

The overall inflation moved up to 7.55 percent in May as compared to 7.23 percent in the previous month.

To tackle inflation, the central bank raised its key lending rate 13 times since March 2010 but began reversing the rate cycle by cutting the repo rate (short-term lending rates) by 50 basis points in April.

The re-purchase rate remains unchanged at eight percent, which automatically keeps the reverse re-purchase rate at seven percent.

The repurchase rate is the interest the central bank levies on short-term borrowings by commercial banks. The reverse repurchase rate is the interest on short-term lending.

A cut in these rates would have reduced the cost of accessing funds for lending institutions. It would have also eased money supply in the financial system by making it more attractive for commercial banks not to park their funds with the RBI in the form of government securities, and instead lend it for commercial purposes.

In April, RBI Governor Duvvuri Subbarao cut the re-purchase rate by 50 basis points to 8 percent, which automatically impacted the reverse re-purchase rate which dropped to 7 percent from 7.5 percent.

Following are the unchanged policy rates and ratios in percentage:

Bank Rate: 9.00

Repo Rate: 8.00

Reserve Repo Rate: 7.00

Marginal Standing Facility Rate: 9.00

Cash Reserve Ratio: 4.75

Statutory Liquidity Ratio: 24.00