Bank of India Raised Interest Rates by 0.5% as Inflation Continues to Rise

The Reserve Bank of India (RBI) raised its repo rate by 0.50% to 4.90% today, in line with market expectations. And it raised interest rates at the meeting for two months in a row. The goal is to control inflation that has continued to rise.

The Reserve Bank of India said “Inflation in India has risen above acceptable levels. Most of the reasons for the high inflation are supply chain problems caused by the Russo-Ukrainian war.”

The Reserve Bank of India also raised its inflation forecast to 6.7% from the previous forecast of 5.7%, while the central bank’s inflation target was 2%-6%.

Under Indian law, if inflation exceeds 6% for three consecutive quarters, the central bank must send a letter to the government explaining the reasons for missing the target. This includes that measures must be taken to reduce the inflation rate to a controllable level.

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