RBI hikes repo rate by 25 basis points to 6.25 per cent

Mumbai: The Reserve Bank of India (RBI) has hiked key policy rate by 25 basis points to 6.25 per cent, reverse repo rate at 6.50 per cent. The meeting of the monetary policy committee (MPC), headed by RBI Governor Urjit Patel which began in Mumbai on Monday ended on today at around 2:30 pm.

This was the first time the six-member committee was meeting for three days instead of the usual two, due to certain administrative exigencies. RBI's six-member committee was entrusted with the task of setting the benchmark interest rate after an amendment was passed through the Finance Act, 2016. After falling for three consecutive months, retail inflation in April rose to 4.58 per cent, wholesale inflation stood at 3.18 per cent which was four month high in April. The Reserve Bank of India today revised retail inflation estimate for 2018-19 to 4.8-4.9 per cent for first half, 4.7 per cent in the second half of the year.

Fuel price hike led to the rise in wholesale inflation in April. The increase in both retail and wholesale inflation was higher than expected in the month of April. After hitting all-time high of Rs 78.43 a litre for petrol and Rs 69.31 for diesel on May 29. After falling for seven consecutive days, petrol and diesel prices has fallen 8 paise and 12 paise respectively today. Petrol and diesel prices are reviewed on day-to-day basis. The projection for gross domestic product (GDP) is 7.5-7.6 in first half and 7.3-7.4 in the second half. RBI retains GDP growth projection at 7.4 per cent for 2018-19.