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Indian Central Bank Hikes Key Interest Rates

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Indian central bank Reserve Bank of India (RBI) hikes repo rate and reverse repo rate by 25 basis points and 50 basis points Tuesday to contain inflation, with the release of latest quarterly review of monetary policy.

As RBI's short-term lending and borrowing rate, repo rate and reverse repo rate move up to 5.75 percent and 4.5 percent, respectively.

The bold monetary tightening exceeds market estimates, which peg RBI's hike of repo rate and reverse repo rate all at 25 basis points.

RBI expected that Indian headline inflation will be 6 percent by March 2011, higher from the projection of 5.5 percent in previous policy review in April.

The central bank said it will endeavor to achieve price stability and anchor inflation expectations employing an array of aggregate and disaggregate measures.

(Xinhua News Agency July 27, 2010)

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