The Reserve Bank of India [RBI] increased its repo rate by 50 basis points to 8.00% from 7.50% and raised the reverse repo rate to 7.00% from 6.50% by the same margin; trouncing market expectations for a 25bp increase. RBI governor, Duvvuri Subbarao, noted: "Considering the overall growth and inflation scenario, there is a need to persevere with the anti-inflationary stance,". The RBI also commented on a desire to "maintain the credibility of the commitment of monetary policy to controlling inflation" and to "reinforce the point that in the absence of complementary policy responses on both demand and supply sides, stronger monetary policy actions are required,".
The Reserve Bank of India increased the repo rate by 25 basis points at its previous meeting to 7.50%, having increased 50bps during the May meeting. India's key inflation measure, the wholesale price index, increased 9.44% in June, up from 9.06% in May, after rising 8.66% in April, and 8.98% year on year in March, exceeding the Bank's previous estimate of 8%. India reported annual GDP growth of 7.8% in the March quarter this year, compared to 8.3% in the previous quarter.