India battles inflation

India's central bank stepped up its battle against inflation, cutting money available for commercial lending but left short-term borrowing rates unchanged.
With inflation at more than three-year high, the Reserve Bank of India hiked the Cash Reserve Ratio (CRR), percentage of deposits commercial banks have to park with the central bank, by 50 basis points on Thursday to tame the inflationary pressure.
This means commercial banks will have less money for commercial loans and is expected to suck up some excess liquidity from the financial system.
Increasing the CRR was the latest in a series of monetary and fiscal measures the government and RBI have taken in recent weeks to wrestle with mounting inflation with fresh parliamentary polls due early next year. The CRR was last hiked in November last year. This was the fifth time CRR was pushed up since 2006.