By Kosaku Narioka
India's central bank raised its policy rate on Wednesday in a bid to tame inflation.
Reserve Bank of India Gov. Shaktikanta Das said that the RBI's monetary-policy committee had decided to increase its policy repo rate by 25 basis points to 6.50%, effective immediately.
All seven economists surveyed by The Wall Street Journal projected that the Indian central bank would raise the policy rate by a quarter of a percentage point.
Mr. Das said the committee also decided to remain focused on the withdrawal of accommodation to ensure inflation remains within the target going forward.
The central bank projects annual inflation of 6.5% for the fiscal year ending in March, down from its previous forecast of 6.7%, and a 5.3% inflation for the next fiscal year, Mr. Das said.
The central bank governor said the Indian economy remained resilient and the global economic outlook didn't look as grim now as a few months ago.
Mr. Das said the Indian economy is expected to grow 6.4% next fiscal year following a projected 7% expansion this fiscal year.
Some economists have said that Wednesday's rate increase would mark the end of the RBI's current tightening cycle as inflation has eased and domestic demand has shown signs of softening.
India's consumer-price index rose 5.7% in December from a year earlier following a 5.9% increase in November. That compared with the central bank's inflation target range of 2% to 6%.
After years of policy stimulus, central banks around the world have been raising rates lately to contain a surge in inflation sparked by the Russia-Ukraine war and the recovery from the Covid-19 pandemic.
The RBI has been tightening policy settings since it increased its policy rate by 40 basis points from 4.00% at an off-cycle meeting in May, its first rate increase in nearly four years.
Write to Kosaku Narioka at kosaku.narioka@wsj.com
(END) Dow Jones Newswires
02-08-23 0039ET
