The Reserve Bank of India (RBI) raised its key interest rate by 50 basis points this Wednesday, taking the repo rate to 4.9% while raising its inflation projection for the current fiscal to 6.7%, well above the upper end of the central bank’s target range of 2% to 6%. Analysts also expect the RBI to reduce liquidity, reinforcing its fight against inflation and extending its effort to return monetary conditions to what they were like before the COVID-19 pandemic, which led to radical action to stimulate the economy.