India's benchmark rate stands pat at 8%

But cash reserve ratio was cut by 25bps to 4.25%.

According to BBVA Research, as reported in today’s India Flash, the Reserve Bank of India left its benchmark repo rate unchanged at 8.0% (BBVA: 7.75%; Consensus: 8.0%), but cut the Cash Reserve Ratio (CRR) by 25 bps to 4.25% (BBVA: 4.25%).

Here's more from BBVA Research:

The decision was based on the RBI’s “objective of containing inflation and anchoring inflation expectations.” The move disappointed government policymakers who had hoped their recent efforts to reinvigorate reforms and ensure fiscal consolidation would provide room for the RBI to lower rates today.

And indeed, the RBI conceded in its policy statement that such government moves may provide such room in the months ahead. We now foresee only limited scope for the rate easing cycle to commence during the remainder of 2012 (against our earlier expectations of an aggregate 50 bps cut to 7.5%), but we still expect a rate cut in the first quarter of 2013.