MUMBAI: India’s new central bank governor hiked the key interest rate Tuesday for a second month running, disregarding calls for lower borrowing costs as he remains focused on battling high inflation.
After its monetary policy meeting in the financial capital Mumbai, the Reserve Bank of India (RBI) said the benchmark repo rate, at which it lends to commercial banks, would be hiked by 25 basis points to 7.75 percent.
“The policy stance and measures… are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth,” bank chief Raghuram Rajan said in a statement.
Most economists had predicted the hike by Rajan as wholesale inflation has been above the RBI’s comfort zone of 5.0 percent for four successive months.
India’s annual inflation jumped to a seven-month-high of 6.46 percent for the month of September, led by surging food and fuel prices.