India Unexpectedly Tightens, Flags Cash Tools to Curb Prices
- No economist in Bloomberg surveys predicted RBI’s change
- "Underlying inflation pressures persist," RBI statement says
A pile of 1000 rupee notes in a bank vault in Ahmedabad on Nov. 11.
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India unexpectedly raised the reverse repo rate while keeping the benchmark unchanged, effectively tightening policy to step up the fight against accelerating inflation. Bonds fell.
The reverse repo rate was raised to 6 percent from 5.75 percent while the benchmark repurchase rate was kept steady at 6.25 percent, the Reserve Bank of India said in a statement in Mumbai on Thursday, citing excess funds in the banking system after the government’s clampdown on cash. No economist in Bloomberg surveys had predicted the move to shrink the corridor.