India's Central Bank raises key interest rate to rein in inflation

NEW DELHI, Dec 7 (Bernama) -- India's central bank on Wednesday raised its key interest rate by 35 basis points (bps) as it tries to tame inflation while supporting the economy amid a tough global environment.

The Reserve Bank of India (RBI) after a meeting of its monetary policy committee (MPC) decided to increase the policy repo rate by 35 basis points to 6.25 per cent with immediate effect, central bank governor Shaktikanta Das said in a statement.

The MPC "was of the view that further calibrated monetary policy action is warranted to keep inflation expectations anchored, break core inflation persistence and contain second round effects," he said.

This was India’s fifth straight interest rate increase.

The RBI chief expects inflation over the next 12 months to remain higher than the bank's four per cent target.

Headline inflation is projected at 6.7 per cent in fiscal year 2022-23 (April-March).

Das said the Indian economy "remains resilient" in the midst of a "hostile international environment" produced by events such as the coronavirus pandemic and the Russia-Ukraine conflict.

"Looking beyond the pandemic and the war, fragmentation in trade, finance and technology is also adding to the forces of deglobalisation. Supply chains are being redrawn on considerations of geopolitical security, leading to 'reshoring' and 'friendshoring'. Food and energy security, together with climate change, have become the biggest challenges to the world," he said.

-- BERNAMA