RBI hiked Interest rates again by 25 basis points

The Reserve Bank today chose to continue with its tight monetary stance and raised interest rates by 25 basis points- 13th time since March, 2010- to tame inflation, even as it lowered the growth target to 7.6% for the current fiscal.

In a major policy decision, Reserve Bank Governor Duvvuri Subbarao also deregulated savings bank deposit rates with immediate effect. “Changing the policy stance when inflation is still far above the tolerance level entails risks to the credibility of the Reserve Bank’s commitment to low and stable inflation,” the policy document said, even as it admits that growth momentum has slowed down.

It said inflation will start cooling by December this year and is likely to come down to 7% by March, 2012. Today’s hike is the 13th since March, 2010. The series of rate hikes has cumulatively increased interest rates by 525 basis points.

  • Present Repo rate: 8.50
  • Present Reverse repo rate: 7.50


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