RBI hikes repo rate by 25 basis points

Mumbai, Jan 31: The Reserve Bank of India (RBI) today raised the short-term repo rate by 25 basis points from 7.25 per cent to 7.50 per cent in its third quarterly review here.

However, the Central Bank has kept the reverse repo, bank rate and CRR unchanged. Repo rate is the rate at which the RBI buys securities to infuse liquidity in the system.

In the monetary review report released by it last evening, the Central Bank had given all indications of hiking the repo rate, keeping in view the inflationary pressure which was hovering around 6 per cent.

The third quarter review of the annual statement on Monetary Policy for the current fiscal, which was released by RBI Governor Dr Y V Reddy here, said that the central bank retains the option to conduct overnight repo or longer term repo under the LAF (Liquidity Adjustment Facility) depending on market conditions and other relevant factors.

The RBI Governor told reporters earlier this month that the inflation, which was hovering around 5.5 per cent at that point of time, was very much on the expected lines. But the inflation rose to 6.1 per cent on January 6, only to marginally decline to 6.0 per cent a week later.

The annual policy statement for 2007-08 will be announced on April 24.

UNI