Tuesday, January 25, 2011

Reserve Bank of India Raises Interest Rates 25bps

The Reserve Bank of India (RBI) raised the repurchase (lending) rate 25 basis points to 6.5% from 6.25% and the reverse repurchase (borrowing) rate 25 basis points to 5.50% from 5.25% as inflation risks continue to outweigh growth risks. The RBI also extended additional liquidity facilities that it had made available to commercial banks due to a liquidity crunch by 2 months. India saw its wholesale price index rise 8.43% year on year in December (7.48% in November), and the RBI raised its headline inflation forecast for March 2011 to 7% from a previous estimate of 5.5%.


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