Despite inflation risks and a sluggish economy, India maintains its interest rate.

• The central bank of India kept the benchmark interest rate at 6.50% on Friday, despite the struggle to control inflation without negatively affecting the growth of Asia's third-largest economy.
• In accordance with economists' predictions in a Reuters poll, India's consumer prices inflation rose to a 14-month high of 6.21% in October, exceeding the RBI's target of 4% and surpassing its tolerance limit of 6%.
• Despite a predicted slowdown in India's economic growth, the Reserve Bank of India has maintained a steady interest rate since February last year.

The central bank of India kept the benchmark interest rate at 6.50% on Friday, despite the struggle to control inflation without negatively affecting the growth of Asia's third-largest economy.

In accordance with economists' predictions in a Reuters poll, India's consumer prices inflation rose to a 14-month high of 6.21% in October, exceeding the RBI's target of 4% and surpassing its tolerance limit of 6%.

Despite a predicted slowdown in India's economic growth, the Reserve Bank of India has maintained a steady interest rate since February last year.

Nearly two years ago, India's economy grew 5.4% from a year ago, which was significantly lower than the 6.5% predicted by Reuters-polled economists.

Concerns have arisen that the RBI's strict measures may jeopardize the economy's 7.2% growth target for the fiscal year ending March 2025 due to the slowdown.

Both Nirmala Sitharaman and Piyush Goyal have reportedly urged for lower borrowing costs to boost lending demand and aid a sluggish economy.

The finance minister stated at an event in Mumbai last month that in order to increase industries' production, bank interest rates must become more affordable.

Although the central bank shifted its policy stance to "neutral" from a more restrictive "withdrawal of accommodation" in the October meeting, the central bank chief Shaktikanta Das has ruled out an immediate rate cut.

The central bank's second term leader, Das, stated in October that an immediate interest rate cut could be "very premature" and "very, very risky," and that he was not eager to follow the lead of global central banks in easing.

Earlier this week, the Indian rupee reached new lows against the U.S. dollar, according to LSEG data. Any monetary easing measures could further weaken the currency and potentially lead to capital outflows. The rupee was last traded at 84.659 against the greenback.

The Nifty 50 index has risen modestly since the GDP release last Friday and is up 13.7% since the start of the year. In contrast, the MSCI Asia ex Japan index, which invests nearly 23% of its funds in India, has fallen around 12% so far this year.

Over the past few days, Indian bonds have seen a decline in their 10-year benchmark yield, reaching a low of 6.677% on Thursday, according to LSEG data. However, the yield increased by 3.1 basis points to 6.711% after the RBI's decision on Friday.

— CNBC's Amala Balakrishner contributed to this report.