WisdomTree India Earnings Fund (EPI) and other ETFs following Indian stocks were lower Friday after Reserve Bank of India unexpectedly raised a key interest rate in an effort to quell inflation.
Raghuram Rajan, the RBI’s new governor, boosted the repurchase rate by a quarter point to 7.5%, the first increase since 2011, Bloomberg News reports.
“It shows their clarity and seriousness in dealing with elevated inflation,” said Rajeev Malik, an economist at CLSA Asia-Pacific Markets.
The central bank cut by three-quarters of a percentage point the short-term interest rate that has had the most effect on bank lending rates lately, the New York Times reports. The RBI has two short-term interest rates.
Rajan also announced the scaling back of some emergency monetary measures introduced a few months ago with the aim of supporting the falling rupee as investors fled from emerging markets, according to CNNMoney.
EPI was down more than 2% in early U.S. trading Friday. [WisdomTree: India’s Rock-Star Economist Assumes Central Bank Leadership]
WisdomTree India Earnings Fund
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- Reserve Bank of India
- Raghuram Rajan