RBI monetary policy: Bank lending rates may go up

Posted By: Samyuktha
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New Delhi, Jul 27: India's apex body for business and industry, Confederation of Indian Industry (CII) has raised concern over the fourth consecutive hike in key policy rates by the central bank fearing that it would translate into a hike in banks" lending rates.

Reserve Bank of India on Tuesday, Jul 27 hiked repo rate, the rate at which RBI lends private and public sector banks, by 25 basis points and raised the reverse repo rate, the rate at which the RBI borrows from banks, by 50 basis points.

The hike was an expected in RBI's quarterly monetary policy review as it continues to take steps to fight inflation, which has hit the double-digit mark.

"The RBI has taken a calibrated approach to monetary policy by hiking the repo rate by 25 basis points. Given that inflation has remained in double-digits, such a move from the RBI was widely expected. Nevertheless, coming so soon on the back of its last hike earlier this month, CII is concerned that this will translate into a hike in banks" lending rates," Mr Hari Bhartia, President of CII said in a statement.

The Confederation also raised concern over RBI raising its year-end inflation estimate to 6.0 per cent as wage pressures can be expected to mount if prices of essential commodities continue to soar.

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