Business & Economy

India hikes interest rates to 6.25% due to inflation

New Delhi, Dec 7 (EFE).- India’s central bank on Wednesday hiked interest rates to 6.25 percent with at eye at controlling inflation.

“The MPC (Monetary Policy Committee) decided by a majority of 5 members out of 6 to increase the policy repo rate by 35 basis points to 6.25 per cent, with immediate effect,” Reserve Bank of India’s (RBI) Governor Shaktikanta Das said in a televised address.

The new measure is aimed at tackling inflation in the Asian country, which “still remains above the upper tolerance band of the target” despite falling as expected to 6.8 percent year-on-year in October, Das added.

The RBI also lowered the real gross domestic product (GDP) growth forecast for the current financial year ending in March to 6.8 percent compared to the 7 percent it had projected earlier.

Despite this downward revision, “India will still be among the fastest growing major economies in the world,” the governor said.

Das pointed out that the world economy was mired in uncertainty due to the impact of the war in Ukraine – which has caused energy and food prices to rise -, following the coronavirus pandemic.

“While no country is spared the ill-effects of such large shocks, emerging market economies (EMEs), especially the ones dependent on food, energy and commodity imports, have been the worst affected,” he said.

The RBI’s decision comes a day after the World Bank lifted its forecast for India’s GDP growth this year from 6.5 percent to 6.9 percent citing a higher resilience of the Indian economy to the global economic situation compared to other emerging markets. EFE

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