India central bank delivers another rate hike, expresses concern over inflation

NEW DELHI: India’s central bank has raised its benchmark interest rate for the third time since May as it tries to fight inflationary pressures that are partially blamed on external geopolitical factors.

The monetary policy committee (MPC) decided unanimously to increase the policy repo rate by 50 basis points to 5.4 per cent, the Reserve Bank of India (RBI) said on Friday.

Inflation is projected at 6.7 per cent for fiscal 2022-23, with the forecast for the July-September quarter being at 7.1 per cent.

June was the sixth consecutive month when inflation was above the RBI’s upper tolerance level of six per cent, RBI governor Shaktikanta Das said in a statement.

“Looking ahead, the inflation trajectory continues to be heavily contingent upon the evolving geopolitical developments, international commodity market dynamics, global financial market developments and the spatial and temporal distribution of the south-west monsoon,“ he said.

The MPC judged that “further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects,“ Das said.-Bernama