RBI chief says need to raise rates to curb inflation

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.

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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.

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