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India's central bank has raised interest rates more aggressively than expected. It's to fend off inflation that has stubbornly remained above 10 percent for the past five months.
The Reserve Bank of India lifted the repo rate, at which it lends to banks, by 25 basis points to nearly 6 percent as expected. But the reserve repo rate, at which it absorbs cash from commercial banks, was increased by 50 basis points to 4 and half a percent, more than predicted.
Analysts say that's due to a high inflation rate, caused by a poor monsoon season. It's the second interest hike this month, and the fourth this year.