RBI hikes repo rate by 25 bps, loans set to get costlier
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RBI hikes repo rate by 25 bps, loans set to get costlier

The central bank keeps cash reserve ratio unchanged at 4 per cent but cuts Marginal Standing Facility by 25 basis points in its quarterly review of the monetary policy.

  • November 4, 2013  
  • |  
  • UPDATED   09:36 IST
RBI Governor Raghuram Rajan
RBI Governor Raghuram Rajan Photo: Reuters

The Reserve Bank of India (RBI) on Tuesday raised the repo rate by 0.25 per cent to 7.75 per cent in its quarterly review of the monetary policy.

The central bank kept the Cash Reserve Ratio (CRR), the proportion of money that commercial banks must keep with the RBI, unchanged at 4 per cent.

However, it cut the marginal standing facility (MSF) rate by 0.25 per cent to 9.25 per cent. MSF is a window for banks to borrow from the RBI.

Key highlights

-Hikes repo rate by 25 basis points
-RBI keeps CRR unchanged at 4 per cent
-Reduces the marginal standing facility (MSF) rate by 25 basis points from 9.0 per cent to 8.75 per cent
-Increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 7.5 per cent to 7.75 per cent
-RBI raises short-term lending rate by 0.25 per cent to 7.75 per cent
-RBI cuts economic growth forecast for this fiscal to 5 per cent from 5.5 per cent projected earlier
-RBI expects growth to pick up in second half of current fiscal on good performance of exports and agriculture
-Retail inflation to remain above 9 per cent: RBI
-WPI inflation expected to remain higher, warrants appropriate policy response