Bigger India Rate Increase Signals Shift in Inflation Fight

The Reserve Bank of India’s decision to double the magnitude of interest-rate increases signals it is ready to step up the battle against inflation even at the risk of damping the nation’s economic growth.

The central bank’s half a percentage point increase in the benchmark repurchase rate to 7.25 percent yesterday was the biggest move since July 2008. Governor Duvvuri Subbarao indicated he would tighten borrowing costs further and predicted inflation will stay at “elevated levels” until September.