India Raises Benchmark Interest Rate from 4.4% to 4.9%... "Second Consecutive Monthly Increase"

Shaktikanta Das, Governor of the Reserve Bank of India (RBI)
[Photo by Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The Reserve Bank of India (RBI) raised its policy repo rate, the benchmark interest rate, by 0.5 percentage points from 4.4% to 4.9% on the 8th (local time) to respond to the surge in inflation. This marks the second consecutive month of rate hikes by the RBI.

According to Bloomberg News, RBI Governor Shaktikanta Das held a press conference on the day and announced that the RBI's Monetary Policy Committee had made this decision.

Last month, the RBI raised rates by 0.4 percentage points for the first time in 3 years and 9 months. India had cut its benchmark interest rate from 6.50% to 6.25% in February 2019 to stimulate the economy ahead of the general election, and continued to lower rates several times even after the COVID-19 pandemic.

India's consecutive rate hikes over two months are interpreted as efforts to reduce inflationary pressures. India's consumer price index (CPI) for April recorded 7.79%, the highest in 8 years. The country's consumer prices have been on the rise since hitting a low of 4.35% in September last year.

Governor Das explained, "Inflation has risen sharply, significantly exceeding the upper bound of the acceptable range," adding, "A substantial part of the price increase is mainly due to a series of supply shocks related to the war."

This content was produced with the assistance of AI translation services.