India raises interest rates for the second month running

Indian rupee notes India's inflation hit a seven-month-high annual rate of 6.46% in September

Related Stories

India's new central bank governor has raised interest rates for the second consecutive month by a quarter of one percent to 7.75% to try to fight inflation.

The move applies to the benchmark repo rate - the rate at which the central bank lends to commercial banks.

The cash reserve ratio - the percentage of banks' deposits they must keep in cash - has been kept unchanged.

India's inflation hit a seven-month-high annual rate of 6.46% in September.

"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.

"It is important to break the spiral of rising price pressures in order to curb the erosion of financial saving and strengthen the foundations of growth," he said.

India's main share index rose 0.20% to 20,611.27 points after Mr Rajan's announcement.

Mr Rajan, who took over as the head of the central bank in September, surprised markets by raising interest rates in his first monetary policy meeting.

India's economy has been hurt by a range of factors in recent months.

A slowdown in key sectors such as mining and manufacturing has curbed its growth rate.

At the same time, foreign investors have pulled out money from the country because of the government's failure to enact key reforms, as well as improving economic conditions in the US.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More India stories


Features & Analysis

Elsewhere on the BBC

  • The AmericansThe good guys?

    A US TV show examining the Cold War is offering a radical revision of history, writes Eric Kohn


  • A person wears a mask at the Vevcani Carnival in MacedoniaThe Travel Show Watch

    The masked Balkan carnival attracting thousands to the streets of Vevcani

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.