India again hikes rates on ‘bleak’ global outlook

INDIA'S central bank said a ‘bleak' global outlook warranted its fourth rate hike in five months on Friday (30), as Asia's third-largest economy struggles under the weight of chronically high inflation and a falling currency.

The Reserve Bank of India (RBI) raised its key lending rate by 50 basis points to 5.90 per cent, marking a total increase of nearly two percentage points since it kicked off a monetary tightening cycle in May.

The country bounced back strongly from the coronavirus pandemic but is now grappling with the same headwinds buffeting the global economy.

‘The global economic outlook continues to be bleak,' RBI governor Shaktikanta Das said. ‘Recent rate hikes and forward guidance about further big rate hikes have caused tightening of financial conditions, extreme volatility and risk aversion.' The RBI retained its inflation forecast for 2022-23 at 6.7 percent, projecting a fall to five percent in the June quarter.

Its economic growth forecast for the current 2022-23 financial year was revised down to seven percent, from the 7.2 percent predicted earlier.