RBI Governor Urjit Patel-led Monetary Policy Committee announced a hike of 25 basis points in the repo rate to 6.5 per cent in its monetary policy statement on Wednesday. This is the third bi-monthly statement by the central bank for financial year 2018-19. Repo rate is the key rate at which the RBI lends short-term funds to commercial banks.
The reverse repo rate stands adjusted to 6.25% and marginal standing facility rate & Bank Rate to 6.75%.
In its last policy review, the RBI had announced a 25-basis-point hike in the repo rate while maintaining its policy stance at ‘neutral’. The June rate hike marked the first in more than four years. Since then, inflation has moved higher, further up from the RBI’s target of 4 per cent over the medium term.