India lifts key rate for 9th time
By Erika Kinetz |
May 4, 2011, Wednesday
|
Print Edition
Print Edition
INDIA'S central bank raised its key interest rate by half a percentage point yesterday, its ninth hike in just over a year, warning that persistent inflation has become a threat to growth in Asia's third-largest economy.
The Reserve Bank of India said the short term lending rate, or repo rate, will go from 6.75 percent to 7.25 percent, with immediate effect.
The bank said that from now on it will set only one policy rate, the repo rate, and fix the reverse repo rate or short-term borrowing rate at 1 percentage point below the repo rate. Yesterday's rise automatically brings the reverse repo rate to 6.25 percent.
Sixty percent of forecasters had anticipated a quarter-point hike, while 40 percent had projected a half-point rise, according to a CNBC-TV18 poll.
The bank said it expects economic growth to slow to 8 percent this fiscal year, from 8.6 percent last fiscal year.
The Reserve Bank of India said the short term lending rate, or repo rate, will go from 6.75 percent to 7.25 percent, with immediate effect.
The bank said that from now on it will set only one policy rate, the repo rate, and fix the reverse repo rate or short-term borrowing rate at 1 percentage point below the repo rate. Yesterday's rise automatically brings the reverse repo rate to 6.25 percent.
Sixty percent of forecasters had anticipated a quarter-point hike, while 40 percent had projected a half-point rise, according to a CNBC-TV18 poll.
The bank said it expects economic growth to slow to 8 percent this fiscal year, from 8.6 percent last fiscal year.
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