Reserve Bank of India raises repo rate by 25 bps, reverse repo by 50 bps

NEW DELHI - The Reserve Bank of India (RBI) on Thursday raised short term lending or repo rate by 0.25 basis points and reverse repo rates by 50 basis points.

The new rates, which come into effect immediately, were announced as part of the first scheduled mid-quarterly review of the monetary policy.

The hike in rates will lead to a rise in cost of funds for the banks and eventually makes loans expensive, which will reduce consumption.

While inflation for August was 8.5 per cent according to the new series with 2004-05 as base year, food inflation was at a high of 15.10 per cent for the week ended September 4.

To check inflation, the RBI had raised these key rates by an identical margin in July. (ANI)