NEW DELHI: RBI Governor Rahuram Rajan disappointed analysts by not cutting key rates in the central bank's monetary policy review. Despite Consumer price Index (CPI) inflation plunging to multi-year lows, Rajan said that it was premature for the RBI to change policy stance.What held the RBI Governor from cutting key policy rates? With economic recovery still being sluggish and inflation coming down drastically, Rajan is of the opinion that the central bank should adopt a wait-and-watch policy.RBI feels that there is still some uncertainty about the evolution of base effects in inflation, the strength of the on-going disinflationary impulses, the pace of change of the public's inflationary expectations, as well as the success of the government's efforts to hit deficit targets."A change in the monetary policy stance at the current juncture is premature. However, if the current inflation momentum and changes in inflationary expectations continue, and fiscal developments are encouraging, a change in the monetary policy stance is likely early next year, including outside the policy review cycle," the bank said.RBI has also revised down its forecast for CPI inflation to 6% for March 2015. "Risks from imported inflation appear to be retreating, given the softening of international commodity prices, especially crude, and reasonable stability in the foreign exchange market," RBI elaborated.Talking about inflation, the Governor admitted that headline inflation has been receding steadily and current readings are below the January 2015 target of 8% as well as the January 2016 target of 6%. "The inflation reading for November - which will become available by mid-December - is expected to show a further softening. Thereafter, however, the favourable base effect that is driving down headline inflation will likely dissipate and inflation for December may well rise above current levels," Rajan said.Monsoon uncertainty and its full impact on prices, is yet another factor that seems to have held back Rajan from easing his stance. "The full outcome of the north-east monsoon will determine the intensity of price pressures relating to cereals, oilseeds and pulses, but it is reasonable to expect some firming up of these prices in view of the monsoon's performance so far and the shortfall estimated for kharif production," he said.According to RBI, weak demand and rapid pace of recent disinflation are factors supporting monetary accommodation. "However, the weak transmission by banks of the recent fall in money market rates into lending rates suggests monetary policy shifts will primarily have signaling effects for a while," the bank said."Nevertheless, these signalling effects are likely to be large because the Reserve Bank has repeatedly indicated that once the monetary policy stance shifts, subsequent policy actions will be consistent with the changed stance," it added.CPI showed retail inflation slowed further to 5.52% in October, another low on the gauge that was launched in 2011, because of softer food and fuel prices.