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

  • French luxury Tea House, Mariage Freres display of tea pots Tea for tu

    France falls back in love with tea - but don't expect a British cuppa

  • Woman in swimming pool Green stuff

    The element that makes a familiar smell when mixed with urine

  • Female model's bottom in leopard skin trousers as she walks up the catwalkBum deal

    Why budget buttock ops can be bad for your health

  • The OfficeIn pictures

    Fifty landmark shows from 50 years of BBC Two

Elsewhere on the BBC

  • ITChild's play

    It's never been easier for small businesses to get their message out to the world


  • Tuna and avacadoThe Travel Show Watch

    Is Tokyo set to become the world's gourmet capital?

BBC © 2014 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.