The reverse repo rate, currently at 3.25 percent, is the rate at which the central bank borrows money from commercial banks. A lowering of this rate makes it less lucrative for banks to park funds with the central bank.

A day ahead of the review, the central bank had sharply raised its growth forecast for the country's economy to 6.5 percent from its earlier projection of 5.7 percent, but warned that inflation could also move into higher territory.

The bank also said food prices -- that are already high, particularly in the case of fruits, vegetables and lentils -- were likely to move northward given the feeble progress of the monsoon and rise in minimum support price paid to farmers for their crops.

'There are indications of inflation firming up by the end of the year due to the waning base effect of last year, increase in commodity prices, delayed progress of monsoon potentially driving up food prices,' it said.