RBI raises key lending rate to 6.5%, says global growth 'uneven'

The Reserve Bank of India (RBI) has raised its key interest rate by a quarter of a percentage point to 6.5%, saying that global growth has become uneven and risks to the outlook have increased with rising trade tensions.

The second interest hike since January 2014 was announced by the RBI on Wednesday. It says the retail inflation has risen to 5% in June from 4.9% in May, driven by an uptick in fuel prices.

The interest rate is what the federal bank charges on lending to commercial banks. The increase is expected to hit borrowers as banks usually pass on the burden to them.

It projected India's GDP growth for 2018-19 at 7.4%. India's financial year runs from April to March.