RBI hikes repo rate by 25 bps, first time in four and half years
Mumbai, Jun 6 (IBNS): The monetary policy committee (MPC) of the Reserve Bank of India (RBI), headed by Governor Urjit Patel, on Wednesday, decided to hike the repo rate by 25 basis points, according to its Second Bi-monthly Monetary Policy Statement.
This is the first hike since the BJP-led National Democratic Alliance government came to power in May 2014.
The reverse repo rate has been adjusted to 6 per cent.
In its release, the MPC said that on the basis of an assessment of the current and evolving macroeconomic situation it decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.25 per cent.
Consequently, the reverse repo rate under the LAF stands adjusted to 6.0 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent.
The decision of the 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, while supporting growth.
All six members of the MPC -- Dr. Chetan Ghate, Dr. Pami Dua, Dr. Ravindra H. Dholakia, Dr. Michael Debabrata Patra, Dr. Viral V. Acharya and Dr. Urjit R. Patel -- voted in favour of the decision.
The next meeting of the MPC is scheduled on July 31 and August 1, 2018.
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