India again hikes rates on 'bleak' global outlook
MUMBAI, Sept 30, 2022 (BSS/AFP) - India's central bank said a "bleak"
global outlook warranted its fourth rate hike in five months on Friday, 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 percent, marking a total increase of nearly two percentage
points since it kicked off a monetary tightening cycle in May.
India 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 in a televised address.
Aggressive rate hikes and ominous commentary from other leading central banks
was posing a "third major shock" to the world economy on the back of the
pandemic and the Ukraine war, he added.
"The recent rate hikes and forward guidance about further big rate hikes have
caused tightening of financial conditions, extreme volatility and risk
aversion," Das said.
Consumer inflation has consistently overshot the central bank's 2.0-6.0
percent target range this year.
Most recent data showed inflation rose to seven percent in August, driven
largely by food prices.
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.
Rising global energy prices blew out India's current account deficit to $23.9
billion in the June quarter, nearly double the figure from the first three
months of the year and the highest since 2013.
India imports more than 80 percent of its crude oil needs and rising petrol
costs have driven spikes in consumer prices for the country's 1.4 billion
The Indian rupee has plunged 10 percent this year and hit a record low of
81.95 against the US dollar earlier in the week as the greenback rallies on
risk-averse market sentiment.
India's currency has proven more resilient than its Asian peers after
intervention by the RBI, which has spent nearly $85 billion of its foreign
reserves to defend the rupee this year.
India's benchmark Sensex index was up 0.33 percent following the rate