Why the RBI raised interest rates despite growth concerns

The Reserve Bank of India has raised the repo rate by 25 basis points and shifted its policy stance from ‘neutral’ to ‘calibrated tightening’ as inflation pressures intensify.

With crude oil prices above $100 a barrel and food inflation driven by a weak monsoon, the RBI has signalled that controlling inflation is now its top priority.

While the central bank believes the economy can absorb tighter monetary conditions, questions remain about the impact on growth, borrowing costs and investment.

This editorial looks at what the latest RBI decision means for inflation, interest rates, consumers, businesses and the broader Indian economy.