Reserve Bank of India (RBI) Governor Raghuram Rajan gave a pleasant surprise to India Inc on Wednesday by leaving key policy rates unchanged, despite insistent high inflationary pressure.

In its mid-quarter monetary policy review, RBI left the short-term lending rate untouched at 7.75 per cent, and the cash reserve ratio (CRR) at 4 per cent.

The central bank left the key policy rates untouched citing the prospect of easing retail prices and its concerns over persistent weakness in the domestic economy.

India Inc welcomed the central bank's decision not to increase interest rates, saying Mr. Rajan had demonstrated foresight to strike the right balance between inflation and growth. Assocham President Rana Kapoor said there was a strong case for lenders to slash lending rates to improve liquidity in the system.

Ficci President Naina Lal Kidwai welcomed the decision, and said that she expected that the central bank's next move would be in the direction of dragging interest rates down.

Commenting on RBI's decision, Kidwai said, "We are happy that RBI has taken cognisance of the weak state of the industrial economy and hope that the next move will be in the direction of lowering of policy rates."

She suggested that the government should improve procurement, warehousing and logistics strategies to tackle the issue of increasing food prices.