The Reserve Bank of India (RBI) raised the benchmark interest rate by 40 basis points, to 4.40%, in a monetary policy decision released on Wednesday (4).
The increase was defined in an extraordinary meeting, in the face of concerns about rising inflation.
Interest has been parked at the historic low of 4% since the start of the pandemic. The monetary authority, however, concluded that, after the most recent meeting, last month, supply bottlenecks stemming from geopolitical tensions persisted.
The war between Russia and Ukraine and restrictive measures to contain Covid-19 in China have amplified global pressures on prices.
In this context, the RBI understood that inflation in the country will remain high for some time, which justifies measures to anchor expectations.
The institution said it will focus on withdrawing monetary accommodation to try to stabilize inflationary dynamics.
After the news, the S&P BSE Sensex index, a benchmark on the Mumbai Stock Exchange, closed down 2.29%, at 55,669.03 points.
Source: CNN Brasil
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