Reserve Bank of India Governor Raghuram Rajan left policy rates unchanged at the year’s final monetary policy review on Tuesday. After already cutting interest rates by 125 basis points this year, RBI indicated that further rate cuts would depend on incoming data on inflation, the government’s ability to stick to its committed path of fiscal consolidation and transmission of the rate cuts announced so far, Livemint reported. The central bank said this would leave further room for accommodation, while also keeping the economy on track to take inflation down by 5% by March 2017.

RBI explained its stance, saying that it would wait to see the impact of a recent increase in retail inflation driven by food prices. Since September, inflation has increased, as anticipated by the bank, and was expected to rise before plateauing in December, the bank said in a statement. Gross Domestic Product data released by the government on Monday showed that the economy had grown at 7.4% in the second quarter of the fiscal year, higher than the 7% of the fiscal year’s earlier quarter. Despite the central bank’s unchanged rates, the Sensex at 12.58 pm was up by 24.71 points at 26,177.62.