RBI Surprises by Raising Interest Rates - India Real Time - WSJ

RBI Surprises by Raising Interest Rates - India Real Time - WSJ:

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Punit Paranjpe/Agence France-Presse/Getty Images

Raghuram Rajan at a news conference at the RBI headquarters in Mumbai, Sept. 4.

Investors and analysts had high expectations from Raghuram Rajan, the new Reserve Bank of India governor, as he announced his first monetary policy Friday.

He delivered a policy with a twist, but not in the way the markets had wanted.

Investors had hoped that Mr. Rajan, who was thought to be pro-growth, would look at ways to get India’s economy back on track. Some economists are predicting that India’s economy will grow at less than 5% in the financial year that ends March, making it the slowest pace of growth in more than a decade.

To boost the economy, the RBI had been cutting rates till earlier this year, but a sharp summer decline in the rupee halted the central bank’s rate easing which started under former RBI governor D. Subbarao."

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