India’s has central bank has raised its interest rates for the ninth time just over a year as it winds down accommodative monetary policy and combat high inflationary pressure, according to Financial Times. On Tuesday, the Reserve Bank of India announced that it would increase its short-term lending rate to 7.25% from the repo rate’s level of 6.75% previously, and that the change would take effect immediately. Additionally, officials will only set policy for the repo rate, with the reverse-repo rate to be automatically set 1% lower. The reverse-repo rate was move to 6.25% as a result.
The Governor of the RBI said, “The Reserve Bank will continue to persevere with its anti-inflationary stance,” and warned, “current elevated rates of inflation pose significant risks to future growth.” The RBI is now forecast for economic growth of 8% in the current fiscal year, which represents a slow-down from 8.6% in the previous period. The official inflation forecast is 6% for the fiscal year, although for the first sixth months of that time inflation is expected to remain near the 9% annual pace recorded during March.
