India raises interest rate by 25 basis points

By Tuba Sahin

ANKARA (AA) – The Reserve Bank of India (RBI) on Wednesday raised its policy repo rate by 25 basis points to 6.5%, in line with economists’ expectations.

India’s sixth consecutive rate hike was lower than last December’s rise of 35 basis points.

The standing deposit facility rate stands adjusted to 6.25%, while the marginal standing facility rate and bank rate is at 6.75%, according to an RBI statement.

The move aims “to keep inflation expectations anchored, break the persistence of core inflation and, thereby, strengthen the medium-term growth prospects,” RBI Governor Shaktikanta Das said at a news conference.

“The bank will continue to maintain strong vigil on the evolving inflation outlook so as to ensure that it remains within the tolerance band and progressively aligns with the target,” he said.

India’s annual inflation rate decreased to 5.72% in December 2022, hitting a 12-month low after double-digit deflation in vegetable prices.

The bank also cut its inflation projection for fiscal year 2023 to 6.5%, while keeping its medium-term target at “4% within a band of +/- 2%, while supporting growth.”