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India's central bank raises rates

2010-04-21 15:42 BJT

India's Central Bank on Tuesday raised key interest rates by a quarter of percentage point. As expected, the move is aimed at battling near double-digit inflation, signaling a gradual tightening in the future to sustain growth and manage record government borrowing.

At the same time, the Reserve Bank of India also raised its cash reserve ratio requirement for banks by 25 basis points. The move was expected in order to drain further liquidity from the financial system.

In March, India's inflation index reached a record high 9.9 percent year-on-year, triggering protests over high food prices. Government officials say inflation will subside in coming months while some economists expect it to remain high for longer.

Editor: Zhang Ning | Source: