The Reserve Bank of India (RBI) raised interest rates on Friday for the 12th time in 18 months and said it will persist with its anti-inflationary policy stance, even as growth slows in Asia's third-largest economy.
The RBI lifted its policy lending rate, called the repo rate, by 25 basis points to 8.25 percent, in line with expectations, as it persisted in a fight with inflation that has proven mostly futile.
Headline inflation for August rose to 9.78 percent, its highest level in more than a year, data showed on Wednesday.
India's economic growth has cooled as the cumulative impact of earlier rate increases and rising prices crimp demand, and an expected pause in tightening connects it to the Asia bandwagon of central banks rolling back on rate hike campaigns.
The rupee rose for a second consecutive day on Friday after the coordinated action by major central bankers to add liquidity into the European banking system.