RBI raises lending, borrowing rates by 25bps; CRR unchanged

Mumbai, Nov 2 (PTI) The Reserve Bank of India on Tuesday
hiked its key short-term lending and borrowing rates by 25
basis points each with immediate effect to rein in inflation,
a move that could increase banks' commercial lending rates.
Accordingly, the short term lending rate or (repo rate)
stands at 6.25 per cent and the borrowing rate (reverse repo)
at 5.25 per cent.
The RBI has, however, left the cash reserve ratio or bank
rate, which is the amount of cash that banks have to park with
the central bank to maintain prudential norms, unchanged at 6
per cent.
"These changes will be with immediate effect," the
Reserve Bank said while announcing the second quarter monetary
policy review here on Tuesday.
After announcing the latest round of rate hikes, which is
the sixth since February this year, it said further rate
action is relatively low in the immediate term, indicating
that its consistent efforts at combating inflation has begun
to bear fruits, even though this is still at a higher level.
So far, RBI has hiked the repo rate by 125 basis points
(bps) —one basis point is 0.01 per cent-- and the reverse
repo by 175 bps, while it spiked the CRR by 100 basis points
in two installments to tame inflation and to normalise the
easy monetary and fiscal policies which were initiated by the
RBI and government following the global financial crisis in
September 2008. MORE PTI JJ
PRI



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