RBI Hikes Repo Rate By 25 bps to 6.5%, Raises Inflation Projection


In 3rd Bi-monthly Policy Statement, the Reserve bank of India’s (RBI’s) monetary policy committee (MPC) raised policy rates by 25 basis points to 6.5% on account of inflationary pressures arising due to hike in minimum support price. 
The committee has increased the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.5%. Consequently, the reverse repo rate under the LAF stands adjusted to 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%. 
RBI also raised the average inflation projection for the second half of the year to 4.8% from 4.7% in June. The central bank expects inflation to edge higher to 5% in the first quarter of next fiscal year. The policy statement also cited the implementation of minimum support price hike as the primary factor stoking inflation this year. The government has fixed the MSP at 150% of the cost of production of all kharif crops. 
Source- The RBI

Static/Current Takeaways Important for SBI PO/Clerk Exam 2018-
  • Urjit Patel- 24th Governor of RBI, Headquarters- Mumbai, Established on- 1st April 1935, in Kolkata.
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