India central bank raises key rate for third time to tame inflation


FE Team | Published: August 05, 2022 12:43:49 | Updated: August 06, 2022 12:06:13


A Reserve Bank of India (RBI) logo is seen at the gate of its office in New Delhi, India, November 9, 2018. REUTERS/Altaf Hussain/File Photo

The Reserve Bank of India's key policy repo rate was raised by 50 basis points on Friday, the third increase in as many months to cool stubbornly high inflation.

With June retail inflation at 7 per cent, economists polled by Reuters had expected another rate hike, but views were widely split between a 25 bps move or a 50 bps increase.

The monetary policy committee (MPC) raised the key lending rate or the repo rate to 5.40 per cent, bdnews24.com reports citing Reuters.

The RBI caught markets off guard with a 40 bps hike at an unscheduled meeting in May, followed by 50 bps increase in June, but prices have shown little sign of cooling so far.

Traders are now awaiting the RBI governor's commentary on the outlook and any clues on the pace of tightening going ahead.

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