The Reserve Bank of India raised its key borrowing rate by a larger-than-expected 50 basis points and its lending rate by 0.25 percentage point, its fifth hike this year.
"Notwithstanding slight moderation in August 2010, headline inflation remains significantly above the trend of 5.0%-5.5% in the 2000s," the RBI said in its mid-term review of monetary policy. "There is, therefore, need for continued policy response to contain inflation and anchor inflationary expectation."
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