NEW DELHI, July 26 (UPI) -- India's central bank, battling stubborn inflation, Tuesday raised its bank borrowing rate to 8 percent, a hefty 0.5 percent point to 8 percent.
Tuesday's action by the Reserve Bank of India was the 11th such increase since October 2009 and was higher than analysts' expectation of 0.25 percent.
The hike was expected to push up the cost of all personal and corporate loans.
The bank left the cash reserve ratio unchanged at 6 percent.
Bank Governor Duvvuri Subbarao said the decision was taken because demand pressures have remained strong and inflation is "expected to remain elevated in the first half of 2011-12." Inflation currently is running more than 9 percent.
He said while there are signs growth is beginning to moderate, there is no evidence, as yet, of a sharp or broad-based slowdown.
The bank revised upward its fiscal year-end inflation estimate to 7 percent from its earlier 6 percent, the Press Trust of India reported.
