MUMBAI, Reuters – On Wednesday, the Reserve Bank of India raised its key interest rate by 50 basis points. This was widely anticipated, and it is now the second increase in as many month. It did this in an attempt to reduce persistently high inflation.

The key lending rate and repo rates were increased by the monetary policy committee (MPC), 50 basis points (bps), up to 4.90%

Accordingly, the Marginal Standing Facilit Rate and Standing Deposit Facility rates were adjusted by the same quantum higher to 4.65% and 5.15 respectively.

Shaktikanta das, RBI Governor, said that the June 8 action was a “no brainer”. However, analysts polled at Reuters were divided on how high it would rise. They had forecasts ranging from 25 to 75 bps.

Analysts expect that the RBI will reduce liquidity and intensify its fight against inflation. They also anticipate the RBI expanding its efforts to restore monetary conditions to the state they were before the COVID-19 epidemic erupted, which prompted drastic action to stimulate the economy.