"Wholesale Price Index inflation is expected to remain higher than current levels through most of the remaining part of the year, warranting an appropriate police response," Raghuram Rajan said in a statement following a monetary policy meeting in the financial capital Mumbai.
The move is a bid to fight inflation, which hit a seven-month-high annual rate of 6.46 percent in September.
"It is important to break the spiral of rising price pressures in order to curb the erosion of financial saving and strengthen the foundations of growth," Rajan - who had warned he was prepared to take unpopular steps to bring the economy back on track - added.
The cash reserve ratio has been kept unchanged.
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