NEW DELHI: On expected lines, the Reserve Bank of India (RBI) on Tuesday kept key policy rates on hold, expressing concerns over rising inflation At its second bimonthly monetary policy review of the financial year, RBI kept the repo rate unchanged at 6.5 per cent. Consequently the reverse repo rate will remain unchanged at 6.0 per cent.The cash reserve ratio (CRR) of scheduled banks has been retained at 4.0 per cent of net demand and time liabilities (NDTL).Ebbing of inflation pressures for two consecutive months to March after a period of steady rise was interrupted once again in April. Retail inflation measured by the consumer price index (CPI) rose sharply due to more than seasonal jump in food prices.“The inflation surprise in the April reading makes the future trajectory of inflation somewhat more uncertain,” the central bank said in the policy statement. “The inflation projections given in the April policy statement are retained, though with an upside bias,” RBI said.A higher inflation will act as a hurdle in any move by the central bank to cut interest rates further.In its bimonthly money policy statement of April 2016, RBI stated that it would watch macroeconomic and financial developments in the months ahead with a view to responding as and when the space opens up, but it maintained an accommodative stance.Incoming data since then shows a sharper-than-anticipated upsurge in inflationary pressures emanating from a number of food items, as well as a reversal in commodity prices."Given the uncertainties, RBI will stay on hold, but the stance of monetary policy remains accommodative. RBI will monitor macroeconomic and financial developments for any further scope for policy action," the RBI note said.Domestic conditions for growth are improving gradually, mainly driven by consumption demand, which is expected to strengthen with a normal monsoon and the implementation of the Seventh Pay Commission award.On a reassessment of balance of risks, therefore, the GVA growth projection for 2016-17 has been retained at 7.6 per cent with risks evenly balanced.RBI pushed for more monetary transmission from banks to support the revival of growth which continues to be critical."The government's reform measures on small savings rates combined with the Reserve Bank's refinements in the liquidity management framework should help the transmission of past policy rate reductions into lending rates of banks," the central bank said.RBI will shortly review the implementation of the marginal cost of lending rate framework by banks. Timely capital infusions into constrained public sector banks will also aid credit flow.Since the first bimonthly statement of the financial year in April 2016, global growth is uneven and struggling to gain traction. " World trade remains muted in an environment of weak demand," said the RBI statement.In the United States , growth was slow once again in Q1 because of contracting industrial activity and exports. Recent indicators of labour market activity have also weakened. s. The US dollar continues to mirror changes in expectations of monetary policy action by the Fed.In the euro area, by contrast, Q1 GDP rose strongly on the back of robust consumer spending and recovering employment and business conditions. In Japan, growth surprised on the upside in Q1, with the economy escaping a technical recession, but industrial activity remains weak and deflationary pressures are building.