RBI hikes policy rates and CRR by 25 basis points

Mumbai, Apr 20 (ANI): The Reserve Bank of India on Tuesday hiked key policy rates by 25 basis points and the Cash Reserve Ratio (CRR) for banks by 25 basis points.

The CRR now stands at six per cent, from 5.75 per cent. The repo rate has been raised to 5.25 per cent from five per cent while the reverse repo rate has been increased to 3.75 per cent from 3.5 per cent.

The hike in CRR, will absorb 12,500-crore rupees excess cash from the banking system. anks have already indicated that they may not pass on the increased cost to the borrowers immediately as liquidity still remains sufficient in the system.

Assuring that the policy actions would not halt the recovery, the RBI pegged the FY'11 GDP growth at eight percent.

It also pegged the wholesale inflation, which is currently hovering close to the double-digits, at 5.5 percent for FY' 11.

The bank, however, said it would closely monitor the situation of price in the economy.

The new repo and reverse repo rates are effective immediately, while cash reserve ration is to take effect from the week beginning April 24. (ANI)