DHAKA: India’s new central bank governor hiked the key interest rate on Tuesday for a second month running, disregarding calls for lower borrowing costs as he remains focused on battling high inflation.

After its monetary policy meeting in the financial capital Mumbai, the Reserve Bank of India said the benchmark repo rate, at which it lends to commercial banks, would be hiked by 25 basis points to 7.75 percent.

‘The policy stance and measures... are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth,’ bank chief Raghuram Rajan said in a statement, reports The Straits Times.

Most economists had predicted the hike by Rajan as wholesale inflation has been above the RBI’s comfort zone of 5.0 percent for four successive months.

BDST: 1652 HRS, OCT 29, 2013
RoR/RK