India raised interest rates for a 13th time since the start of 2010 and signaled it’s nearing the end of its record cycle of increases as the economy cools. Bonds and stocks rose.
“The likelihood of a rate action in the December mid- quarter review is relatively low,” the Reserve Bank of India said in a statement in Mumbai today after it boosted the repurchase rate to 8.5 percent from 8.25 percent. Eighteen of 28 economists in a Bloomberg News survey predicted the decision and the rest forecast no change.
Governor Duvvuri Subbarao is under pressure to shield India’s economy from Europe’s debt crisis and a faltering U.S. recovery, after counterparts in Brazil and Russia lowered borrowing costs in recent weeks. The Reserve Bank today cut India’s growth estimate, predicting the second-slowest expansion in nine years, and blamed the government’s “expansionary” budget for stoking inflation.
