RBI hikes repo rate by 25 basis points to 6.25%

Representational Image (Photo: Facebook)


Following a cycle of rate cuts begun in January 2015, the RBI on Wednesday raised its key interest rate for the first time by 25 basis points to 6.25 per cent, a central bank announcement said.

“Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6.0 per cent, and themarginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent,” the Reserve Bank of India said.

“The decision of the Monetary Policy Committee (MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent,” it added.

Meanwhile, the key Indian equity indices surged as the Reserve Bank of India (RBI) came out with its second bi-monthly monetary policy review where it has decided to raise the repo rate by 25 basis points.

The 30-scrip Sensitive Index (Sensex) was trading 229.11 points or 0.66 per cent higher.

The wider 50-scrip Nifty of the National Stock Exchange (NSE) was also trading 70.35 points or 0.66 per cent higher at 10,663.50 points.

The Sensex of the BSE, which opened at 34932.49 points, traded at 35,132.32 points (at 2.48 p.m.), 229.11 points or 0.66 per cent higher from the previous day’s close at 34,903.21 points.

The Sensex touched a high of 35,202.51 points and a low of 34,896.37 points in the trade so far.