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The Reserve Bank Of India (RBI) hiked the repo rate by 50 basis points to 5.90 per cent on Friday.
This is the fourth straight increase in the last five months, which saw the rates increase by 190 basis points.
Though the central bank had slashed the repo rate in March 2020 to tackle Covid-induced economic stress, it increased the rates in May 4, 2022, after maintaining a status-quo in key lending rates for almost two years.
The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 7 per cent in August.
The latest RBI action follows the US Federal Reserve effecting the third consecutive 0.75 percentage point interest rate increase, taking its benchmark rate to a range of 3-3.25 per cent earlier this month.