RBI hikes short-term lending, borrowing rates by 25 basis points

NEW DELHI - The Reserve Bank of India (RBI) on Tuesday hiked its key short-term lending and borrowing rates by 25 basis points each with immediate effect to rein in inflation.

The short-term lending rate or repo-rate stands at 6.25 percent and the borrowing rate (reverse repo) at 5.25 percent.

The RBI has, however, left the Cash Reserve Ratio or the bank rate, which is the amount of cash that banks have to keep with the central bank to maintain prudential norms, unchanged at six percent.

“These changes will be with immediate effect,” the Reserve Bank said today, while announcing the second quarter monetary policy review in Mumbai.

The RBI after announcing the latest round of rate hikes, which is the sixth since February 2010 said further rate action is relatively low in the immediate term, indicating that its consistent efforts at combating inflation has begun to bear fruits, even though this is still at a higher level.

The apex bank has so far hiked the repo rate by 125 basis points. (ANI)