RBI Hikes Repo Rate To 6.25%, Loan EMI Goes Up

RBI Hikes Repo Rate by 0.35% with immediate effect to 6.25%. Due to higher inflation, the Reserve Bank of India had announced a 35-basis-point increase in the repo rate to 6.25 per cent. The RBI Monetary Policy Committee (MPC) voted to raise the rate to bring elevated inflation back towards its target of 4%.

The Standing Deposit Facility rate – which represents the floor of the interest rate corridor, is now 35 bps higher at 6 per cent. The Marginal Standing Facility rate, which is the upper band of the interest rate corridor, has also been increased by 35 bps to 6.50 per cent.

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The RBI governor also announced a mild reduction in the GDP growth forecast for the current financial year to 6.8 per cent from 7 per cent earlier. 

The six-member MPC, which held its bi-monthly policy meeting remained focused on withdrawing accommodation. The MPC’s rate action was not unanimous, with 5 out of 6 members voting for the rate hike. The decision on the stance was also not unanimous, with 4 out of six members voting for the retention of the stance.

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