India raises interest rate to 5.90% to tame inflation

India’s central banks has raised its key interest to 5. 90% and said developing economy were facing slowing growth, elevated food and energy prices, debt distress and currency depreciation

NEW DELHI — India’s central bank on Friday raised its key interest rate by 50 basis points to 5. 90% in its fourth hike this year and said developing economies were facing challenges of slowing growth, elevated food and energy prices, debt distress and currency depreciation.

Reserve Bank of India Governor ShaktikantaDas projected that inflation would be 6.7% for the current fiscal year, which will end next March. In a statement made after a meeting by the bank’s monitoring board, Das stated that June saw the sixth consecutive month of inflation exceeding the tolerance level of 6%. He stated that the central bank will continue to focus on the withdrawal from the accommodative monetary policy.

The bank’s monetary committee reduced the real economic growth forecast to 7.2% for the current financial years, down from 7.2% in August. The expected economic growth for the first quarter in the next financial year will be 6.7%.

Das said the world has been confronted with one crisis after another, but India has withstood shocks from the coronavirus pandemic and the conflict in Ukraine.

Das also said the Indian rupee has depreciated by 4% since April against 14% appreciation in the U.S. dollar. He said that the rupee has performed better than other currencies and that the Reserve Bank Of India’s foreign currency reserves umbrella is still strong.

The Indian rupee has plunged to an all-time low of 81. 58 rupees to one U.S. dollar.

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