Indian central bank hikes rates for first time since 2023
In doing so, the RBI has shifted gears to join several central banks around the world who have raised rates to curb price rises or boost their currencies.
India's central bank, the Reserve Bank of India (RBI), has raised interest rates for the first time since 2023, amid concerns of inflation and a weakening rupee. The benchmark repurchase rate, at which the RBI lends to commercial banks, has been increased by 25 basis points to 5.50 percent. India's economy, the world's third-largest, has been affected by the Iran conflict, causing inflation to rise and the rupee to weaken.
Retail inflation stood at 4.8 percent in August, breaching the RBI's medium-term target of 4 percent. The central bank is expected to consider further rate hikes, as the rising interest rate backdrop globally has reduced the RBI's degrees of freedom.
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