India's new central bank chief unexpectedly raised interest rates Friday, putting a higher priority on taming stubbornly high inflation than bowing to pressure to juice the struggling economy with cheap credit.
Asia's third-largest economy has been looking to respected former IMF chief economist Raghuram Rajan to rescue it from slow growth, high inflation and a weakened currency. He has been governor of the Reserve Bank of India for less than a month but already has been hailed as a rock star in local media.
But his tough love approach to monetary policy in his first review of interest rates will put the onus on India's politicians to fix deep-seated problems in the economy. He raised the benchmark interest rate at which banks borrow from the central bank by a quarter percentage point to 7.5 percent.
The surprise rate hike sent Indian stocks into a tailspin. The Sensex index was down 2.2 percent

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