The Reserve Bank of India kept its policy rate on hold at 5.25% today, as policy-makers chose not to react to what they see as a temporary surge in inflation.

In remarks at a press conference, governor Sanjay Malhotra noted that consumer price inflation had climbed above the RBI’s 4% target, as expected. “The higher inflation is mostly on account of fuel and food with little signs of generalisation of price pressures so far,” he said.

Inflation rose from 3.9% in May to 4.4% in June, above target