India raises rates for fifth time

High food prices have helped fuel inflation

India’s central bank has raised interest rates by more than expected as it continues to battle high inflation.

The Reserve Bank of India increased its repo rate – the rate at which it lends to banks – to 6% from 5.75%.
It raised the reverse repo rate – the rate at which it borrows from banks – to 5% from 4.5%. Economists had expected a rise to 4.75%.

It is the fifth rate hike this year as India has faced double-digit inflation, although it fell to 8.5% in August.
The fall – from 9.8% the previous month – was partly due to changes in the way it is calculated to include a wider range of consumer goods.
Under the old system, August’s inflation rate would have been 9.5%.
“Inflation remains the dominant concern,” the central bank said.