India Announces Interest Rates Rise

India has announced a change to interest rates in a move designed to support the economy.

The Reserve Bank of India (RBI) revealed that rates will be increased by a quarter of a percentage point as the government tries to control inflation in the Asian nation.

"Bringing down inflation to more tolerable levels warrants raising the repo rate by 25 basis points immediately," RBI president Raghuram Rajan said.

Anjali Verma, chief economist at PhillipCapital, stated that analysts had not expected the RBI to announce that it was hiking the repo rate.

"He is saying the improved international conditions will take care of the current account deficit funding and his focus will shift to fiscal deficit and inflation, which were taking a backseat," said Mr Verma.

This comes shortly after the Bank of England's Monetary Policy Committee announced interest rates would be held at 0.5 per cent for another month.

It is not expected that rates will increase in the UK until unemployment drops to seven per cent.

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