Released on: August 14, 2008, 12:19 pm

Press Release Author: Ed Mcmahon

Industry: Financial

Press Release Summary: Reserve Bank of India raises interest rates to combat
inflation at 13 year high.

Press Release Body: Sources close to World Capital Solutions called India\'s
aggressive 50 basis points interest rate hike to cool inflation, appropriate.
The move is aimed at taming India's 9% rate of inflation which is its highest for 13
years. The key repo rate at which the RBI lends short term money to banks was raised
to 9 per cent, a seven-year high. World Capital Solutions's source said the firm
regarded the RBI's reduced GDP growth forecast for the emerging economy in 2009 as
respectable given the far lower levels expected for Western counterparts.
Bombay\'s benchmark 30-share Sensex fell nearly 4 per cent on the news.
World Capital Solutions's analysts were surprised at the 50 basis points given
widespread expectations of only 25.
Inflation in India now stands at nearly 12 per cent - more than double the RBI\'s 5.5
per cent target and nearly three times the level recorded at the beginning of the
year and this, said the World Capital Solutions source, meant the bank would
struggle to meet the 5.5 per cent target by next March when its financial year ends.


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Contact Details: Ed Mcmahon
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