{"id":28918,"date":"2018-10-24T15:46:01","date_gmt":"2018-10-24T10:16:01","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=28918"},"modified":"2018-10-24T15:46:01","modified_gmt":"2018-10-24T10:16:01","slug":"rbi-hikes-repo-rate-by-25-basis-points-to-6-25","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/rbi-hikes-repo-rate-by-25-basis-points-to-6-25\/","title":{"rendered":"RBI hikes repo rate by 25 basis points to 6.25%"},"content":{"rendered":"

RBI hikes repo rate by 25 basis points to 6.25%<\/strong><\/p>\n

News:<\/u><\/strong><\/p>\n

1. The RBI raises repo rate as international crude oil price surges.<\/p>\n

Important facts:<\/u><\/strong><\/p>\n

2. The six-member monetary policy committee (MPC)<\/strong> of the Reserve Bank of India (RBI) increased the repo rate by 25 basis points to 6.25%.<\/p>\n

3. The last hike was in January 2014.<\/p>\n

Reasons for increased in repo rate:<\/u><\/strong><\/p>\n

Hardening inflation trends.<\/strong><\/p>\n

4. A firming up of growth recovery at home.<\/strong><\/p>\n

5. Global uncertainties<\/strong> affecting emerging markets.<\/p>\n

6. The rupee, along with other emerging market currencies, is hurting too.<\/p>\n

7. Crude oil prices<\/strong> have been the biggest factor at play, rising 12% from $66 a barrel when the MPC met in April to $74 a barrel.<\/p>\n

RBI\u2019s Inflation projection:<\/u><\/strong><\/p>\n

8. The RBI increased its inflation projection to 4.8% -4.9% in the first half (H1) of the financial year and 4.7% in the second half, as compared with 4.7-5.1% in H1 and 4.4% for H2.<\/p>\n

9. The Apex bank said, the Indian crude basket surged to $74 a barrel from $66 since the last policy meeting in April.<\/p>\n

10. Consumer price index-based inflation, or retail inflation, rose to 4.6% in April from 4.28% in March.<\/p>\n

11. While the central bank has increased the inflation projection, it has maintained the \u2018neutral\u2019 stance for monetary policy.<\/p>\n

GDP growth projection:<\/u><\/strong><\/p>\n

12. The outlook for GDP growth for 2018-19 has been retained at 7.4% as projected in the April Policy.<\/p>\n

13. GDP growth is projected to be in the range of 7.5-7.6% in H1 and 7.3-7.4% in H2, with risks with risk evenly balanced.<\/p>\n

Possible consequences:<\/u><\/strong><\/p>\n

14. As inflationary trends harden, the RBI\u2019s rate hike will quell uncertainty in the markets.<\/p>\n\n\n\n
15. Important terminology related to this article:<\/strong><\/p>\n

1-\u00a0\u00a0\u00a0\u00a0\u00a0 REPO RATE:<\/strong><\/p>\n