RBI solicitous over inflation, hikes repo rate by 25 basis points

Mumbai: Following a cycle of rate cuts begun in January 2015, the RBI on Wednesday raised its key interest rate for the first time, in four-and-a-half years during the Modi government, by 25 basis points to 6.25 per cent, apparently mindful on inflation.

During the bi-monthly meeting of Monetary Policy Committee, the RBI, however, retained the growth projection of 7.4 per cent during 2018-19.

The Central Bank further stated, "Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent."

Also Read: Ex-RBI Deputy Governor made Bandhan Bank's non-executive Chairman

"The decision of the Monetary Policy Committee (MPC) is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent," it added.