India’s central bank on Friday raised its key interest rate by 50 basis points to 5.4%, the third such increase since May, as the bank focused on curbing inflation in the country.
Reserve Bank of India Governor Shaktikanta Das forecasts inflation at 6.7% at the end of this fiscal year.
In a statement following the meeting of the Bank’s Monitoring Committee, he said that June is the sixth month in a row that inflation has exceeded the central bank’s 6% allowance. within the target to move forward while maintaining growth.
He noted: “The global economic and financial environment has deteriorated due to the combined effect of monetary tightening around the world and the war in Ukraine, which increases recession risks.”
The Indian rupee fell to its lowest level ever at Rs 79.05 to the US dollar. Das attributed his weakness to a rising dollar as interest rates in the United States rose.