The RBI left its key interest rates unchanged as expected on Tuesday but said policy focus was shifting towards growth, reiterating its October guidance of further easing in the first quarter of 2013 as inflation was seen cooling.

"In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards," the Reserve Bank of India wrote in its mid-quarter monetary policy review.

The RBI kept its policy repo rate at 8 per cent and also held the cash reserve ratio, or the amount of deposits that banks must keep with the central bank, at 4.25 per cent.

Following are highlights from the monetary policy statement:

POLICY MEASURES

* Keeps repo rate unchanged at 8 per cent.

* Reverse repo stays at 7 per cent.

* Cash reserve ratio stays at 4.25 per cent.

POLICY STANCE

* Monetary policy has to increasingly shift focus and respond to threats to growth from this point onwards.

* Recent inflation pattern reinforces October guidance for policy easing in Jan-March.

* Liquidity conditions will be managed to support growth.

* Even as policy emphasis shifts towards growth, it will remain sensitive to inflation risks.

INFLATION STANCE

* Emerging patterns reinforce the likelihood of steady moderation in inflation going into 2013/14.

* Inflation may edge higher over next two months.

* Though consumer price inflation remains stubborn, the pace of moderation in wholesale price inflation has been faster than anticipated.

* Excess capacity in some sectors is working towards moderating core inflation.

* Headline inflation has been below RBI projections for past two months.

* Decline in core inflation has been comforting.

* Elevated food and commodity prices remain contingent risks, especially for emerging and developing economies facing domestic supply constraints.

GROWTH, ECONOMY

* GDP growth is evolving along the baseline projection of 5.8 per cent for 2012/13.

* There are some incipient signs of pick-up though growth remains significantly below its recent trend.

* Recent government policy initiatives, further reforms should help improve investment climate.

* Biggest risk to the global outlook stems from political economy considerations that could impede, delay or erode resolute policy action.

* Some indications of a modest firming up of activity in Q3 (October-December).

* Rabi (winter) sowing coverage is expanding steadily, improving the prospects of agricultural growth. (REUTERS)