India needs to raise interest rates to restrain inflation, said Duvvuri Subbarao, governor of the Reserve Bank of India, on Monday.
Restraining inflation will ensure medium-term economic growth is sustainable, he said in a speech on India and the global financial crisis.
The 10-year benchmark bond yield rose 2 basis points to 8.45 percent after the governor's comments.
Last week, the RBI had raised interest rates by 50 basis points in a bid to tame inflation amid signs of slowing economic growth. It was the 11th rate increase since March 2010.