India raises key interest rate
Afp, New Delhi
The Reserve Bank of India on Wednesday raised its key short-term borrowing rate by a quarter percentage point to 7.50 percent citing inflation risks as it also hiked its full-year growth forecast. The central bank however kept other rates unchanged including its overnight deposit rate at 6.0 percent after inflation hit 6.12 percent in January. "The objective will be to bring inflation as close as possible to the 5.0-5.5 percent rate at the earliest," the central bank said in its policy review. The central bank raised its full-year growth forecast for the year to March 2007 to 8.5 to 9.0 percent from an earlier forecast of above 8.0 percent. Prices in India are now well above the annual rise of 5.0 to 5.5 percent expected by the central bank for the year ended March which had led analysts to expect rate increases in both short-term rates.
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