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Strong momentum in India's economic activity has continued in the first quarter of the new financial year that started in April with private investment also picking pace, Reserve Bank of India Governor Shaktikanta Das said on Tuesday.

The RBI kept the key repo rate unchanged at 6.5% for an eighth straight policy meeting earlier in June saying robust economic growth will give it space to focus on bringing down inflation towards its medium-term target of 4%.

During his speech at the ET Now Leadership Dialogues 2024 in Mumbai, Das said rural demand, which was earlier lagging behind, has also visibly improved and trends indicated that rural demand will hold going ahead.

Despite global growth yet to pick up, Das said external demand was expected to remain strong and will give a lot of support to India's merchandise and services exports.

On inflation, Das said prices were moderating but at a very slow pace and reiterated that the last mile of disinflation was proving "sticky, arduous and very slow". Core inflation reached a historical low of around 3% in May, he added.

Annual retail inflation in May rose 4.75%, slower than 4.83% in April and below 4.89% forecast by 50 economists polled by Reuters.