"Growth is clearly decelerating. This reflects the combined impact of several factors-- the uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties," it said in monetary policy review.
While several key economic legislations, including insurance and PFRDA bills, are pending in Parliament, the government had to recently put on hold its decision to open the multi-brand retail sector to foreign investors.
Before today's halt in rate hikes, the central bank had increased key policy rates 13 times since March, 2010, to tame rising prices. The central bank said since October the global economic outlook, amid euro zone crisis, has worsened significantly and is posing threats to emerging market economies (EMEs), including India.
Referring to its earlier GDP growth projection of 7.6 per cent for the current fiscal, the RBI said "considering the global and domestic macroeconomic situation, the downside risks to the RBI growth projection, as set out in the second quarter review (in October), have increased significantly".
In October, the RBI had revised downward its growth projection to 7.6 per cent, from 8 per cent earlier, citing high inflation and global slowdown, as major reasons.
The government has already lowered its estimates for the economic growth to 7.5 per cent from 9 per cent. "Overall, the growth momentum in the economy is clearly moderating," the RBI policy document added.