India’s central bank has unexpectedly hiked key interest rates a quarter of a percentage point, as the bank tries to cool high inflation amid a faster-than-expected economic rebound.
The bank raised the benchmark repo rate, at which the central bank makes short-term loans to commercial banks, to 5 per cent and raised the reverse repurchase rate, the rate at which it borrows from commercial banks, to 3.5 per cent, with immediate effect.
The Reserve Bank of India said in a statement after trading hours on Friday; “These measures should anchor inflationary expectations and contain inflation going forward. As liquidity in the banking system will remain adequate, credit expansion for sustaining the recovery will not be affected.”
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