RBI hikes repo rate by 25 bps to 6.5%, home loans set to get costlier
News | August 01, 2018 15:43 ISTRBI hikes repo rate by 25 bps to 6.5%, home loans set to get costlier
RBI hikes repo rate by 25 bps to 6.5%, home loans set to get costlier
This the first time since October 2013 that the RBI has hiked borrowing costs at two consecutive policy meetings.
The BSE Sensex, which opened strong at 34,932.49, fell immediately after RBI's policy announcement but soon recovered to touch the day's high of 35,230.54.
Reserve Bank of India (RBI) projects inflation for 2018-19 at 4.8- 4.9% in first half and 4.7% in the second half of the year, projection for GDP is 7.5-7.6 in first half and 7.3-7.4 in the second half.
With all the six members voting for an increase in policy rates, the Monetary Policy Committee raised "repo rate by 25 basis points and kept the stance neutral", RBI said in a statement.
This is its biggest single day gain since March 12 when it had rallied 610.80 points. The gauge had lost 351.56 points in the previous session.
The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, had last reduced the benchmark lending rate by 0.25 percentage points to 6 per cent last August, bringing it to a 6-year low.
RBI's monetary policy announcement on Thursday will be the first after the Union Budget 2018-19.
According to global financial services major UBS, the tone of the policy statement by the RBI’s monetary policy committee (MPC) is expected to “remain cautious while maintaining a neutral policy stance”.
Announcing the policy review, the RBI said its decision is consistent with the neutral stance of the central bank aimed at achieving its median inflation target of 4%.
The RBI also lowered the economic growth projection to 6.6 per cent for 2017-18 from the previous 67 per cent. It estimated 7.2 per cent growth in the next fiscal.
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