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The Reserve Bank of India (RBI) on Friday raised the benchmark lending rate by 50 basis points to 5.90% in a bid to check inflation, which has remained above its tolerance level for the past 8 months.

With the latest hike, the repo rate or the short-term lending rate at which banks borrow from the central bank is now close to 6%.

This is the fourth consecutive rate hike after a 40 basis points increase in May and a 50 basis points hike each in June and August. In all, RBI has raised the benchmark rate by 1.90% since May this year.

The six-member Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das decided in favour of the rate hike.

The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 7% in August. Retail inflation has been ruling above the RBI’s comfort level of 6% since January this year.

Das retained the inflation projection at 6.7% for the current fiscal while slashing the real GDP growth estimate to 7% from the earlier forecast of 7.2% for FY’23.

The latest RBI action follows the US Federal Reserve affecting the third consecutive 0.75 percentage point interest rate increase, taking its benchmark rate to a range of 3-3.25% earlier this month.