NEW DELHI, Jan. 29 (Xinhua) -- The Indian central bank, the Reserve Bank of India (RBI), Friday raised a key policy rate to 5. 75 percent after reporting a high 8.5 percent inflation.

The cash reserve ratio, which is the minimum liquid assets commercial banks have to retain against deposits, will be raised to 5.75 percent in two phases, said the central bank officials.

All other policy rates remain unchanged in Indian banks.

This would suck out excess liquidity worth 360 billion rupees ( 7 billion U.S. dollars) from system, said the officials.