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June 06, 2018

RBI hikes Repo Rate to 6.25 bps after more than 4 years

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In it's June 2018 monetary policy meet, the 6 member RBI Monetary Policy Committee (MPC) headed by Governor Urjit Patel increased the Repo Rate (the rate at which the RBI lends short-term money to the banks) by 25 Basis Points to 6.25 Per Cent. This was the first rate hike by the Indian central bank in four-and-a -half years, since the BJP-led National Democratic Alliance government was vo ted into office in May 2014. The central bank has also increased the Reverse Repo Rate (the rate at which the RBI borrows from commercial banks) to 6 per cent. Here are the Highlights of RBI's 2nd Monetary Policy review 2018.

Highlights of the second bi-monthly monetary statement for 2018-19
  • RBI hikes key lending rate (repo) by 0.25 per cent to 6.25 pc    
  • Rate hike is the first in four-and-half-years    
  • Reverse repo rate stands at 6 pc, bank rate at 6.50 pc
  • Growth projection retained at 7.4 pc for 2018-19      
  • Projects retail inflation at 4.8-4.9 pc for April-September, 4.7 pc in H2 
  • Major upside risk to the inflation path as price of crude rose by 12 pc       
  • Volatile crude oil prices adds to uncertainty to the inflation outlook       
  • Investments recovering well; to get boost from swift resolution under IBC    
  • Geo-political risks, financial market volatility, trade protectionism to impact domestic growth    
  • Adherence to budgetary targets by the Centre and states will ease upside risks to the inflation outlook     
  • All members of the monetary policy committee voted for 0.25% rate hike       
  • Next meeting of the Monetary Policy Committee is on July 31 and August 1.

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