New Delhi: The Reserve Bank of India's decision on Tuesday to raise key rates will lead to an easing of inflation while keeping economic growth on track, said Finance Minister Pranab Mukherjee.
The RBI raised interest rates more forcefully than expected in the face of inflation that has held stubbornly above 10 per cent for the past five months.
The RBI lifted its key lending rate by 25 basis points to 5.75 per cent as expected, but raised its borrowing rate, which it uses to absorb excess cash from the system, by 50 basis points to 4.50 per cent.
Economists and investors had expected a 25-basis point increase in both rates.
Headline inflation has been in double digits for five straight months, sparking street protests. The opposition has demanded a vote in parliament against the government on high prices.
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