Indian central bank hikes rates for first time since 2023

According to Dawn, the Reserve Bank of India increased its main policy rate on Wednesday, a rise of 25 basis points that takes it to 5.50 per cent. It was the first increase since February 2023, and the six-member panel reached its decision unanimously.

Governor Sanjay Malhotra said inflation was no longer benign, and retail price growth reached 4.8 per cent in August. That was the third consecutive month in which headline inflation stood above the central bank's 4 per cent medium-term goal, with price pressures spreading beyond food and transport.

The rupee has been close to record lows over the past week, while foreign investors continue to sell Indian equities and crude trades around $100 a barrel. Elara Capital's Garima Kapoor said she sees a likelihood of a further 50 bps increase during this cycle.