MUMBAI: India's central bank on Wednesday (Oct 7) hiked interest rates for the first time since 2023, as the Middle East conflict stokes inflation in Asia's third-largest economy and batters a weakened rupee.
The Reserve Bank of India (RBI) said the benchmark repurchase rate, the level at which it lends to commercial banks, would be raised by 25 basis points to 5.50 per cent after a unanimous vote by a six-member panel.
In doing so, the RBI shifted gears to join several central banks around the world who have raised rates to curb price rises or boost their currencies.
Since the outbreak of the Iran war in February, the RBI has stood pat as it waited to assess the impact of volatile oil prices on the world's fastest-growing major economy.
Guess WordCrack the word, one row at a timeBuzzwordCreate words using the given lettersMini SudokuTiny puzzle, mighty brain teaserMini CrosswordSmall grid, big challengeWord SearchSpot as many words as you can Show More Show LessBut resilient GDP growth last quarter has allowed it to focus on higher costs in a country that imports most of its energy and has been hit by a weak monsoon that could result in a spike in food prices.
Retail inflation rose to 4.8 per cent in August - the third straight month that headline inflation breached the RBI's medium-term target of 4 per cent - with data signalling that inflationary pressures had spread beyond food and transport.
"It is clear that inflation and its outlook are not benign as they were last year," RBI governor Sanjay Malhotra said in a televised address from financial capital Mumbai, noting that there was "some evidence of... generalisation of inflation".