RBI raises key lending rate to 5.5% to curb inflation
The Reserve Bank of India (RBI) just raised its key lending rate by 25 basis points, bringing it to 5.5%.
Why? India's economy is facing some tough headwinds: think higher global oil prices, unpredictable weather from El Nino hitting crops, shaky global markets, and ongoing geopolitical tensions.
RBI governor Sanjay Malhotra summed it up: "Higher international oil prices are a major concern for the RBI as they can feed into domestic inflation and raise input costs across the economy."
Weighted CPI above 4% about 37%
Prices are climbing faster than usual, with the weighted share of CPI items recording inflation above 4% increasing to about 37% in August.
Malhotra pointed out that this trend could spread further if left unchecked.
The rate hike is RBI's way of trying to keep inflation in check while making sure the economy keeps moving forward.