MUMBAI (AFP) – India’s central bank yesterday raised its main interest rate for the fifth time this year, but by a smaller margin as inflation eases and other countries look to slow the pace of hikes.
The move by the Reserve Bank of India (RBI) comes after United States (US) Federal Reserve chairman Jerome Powell signalled last week that officials would begin to take their foot off the pedal.
“GDP growth in India remains resilient and inflation is expected to moderate,” RBI Governor Shaktikanta Das said in a webcast.
However, he added, “But the battle against inflation is not over. Pressure points from high and sticky core inflation, and exposure of food inflation to international factors and weather-related events, do remain.”
Das said the benchmark repurchase rate would rise 35 basis points to 6.25 per cent, following three straight rises of half a percentage point since June and one of 40 points in May.
The move was in line with market expectations.
Consumer inflation has this year hovered above the RBI’s upper band of six per cent, hitting a high of 7.79 per cent in April, though it eased to 6.77 per cent in October.
The bank retained its inflation forecast of 6.7 per cent for the fiscal year to March but trimmed its economic growth projection to 6.8 per cent from seven per cent.
India imports more than 80 per cent of its crude oil needs and rising petrol costs – caused by the invasion of Ukraine – have had a ripple effect on prices for the country’s 1.4 billion people.