India raises interest rates

India's new Central Bank Governor has raised interest rates for the second consecutive month by a quarter of one percent to 7.75% to fight inflation. The move applies to the benchmark repo rate - the rate at which the Central Bank lends to commercial banks. The cash reserve ratio – the percentage of banks’ deposits they must keep in cash - has been kept unchanged. India's inflation hit a seven-month high annual rate of 6.46% in September.

“The policy stance and measures are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth,” bank chief Raghuram Rajan said in a statement.

“It is important to break the spiral of rising price pressures to curb the erosion of financial saving and strengthen the foundations of growth,” he said.

India's main share index rose 0.20% to 20,611.27 points after Rajan's announcement.

Rajan, who took over as head of the Central Bank in September, surprised markets by raising interest rates in his first monetary policy meeting.

India's economy has been hurt by a range of factors in recent months. A slowdown in key sectors such as mining and manufacturing has curbed its growth rate.

BBC