Monetary policy: RBI hikes repo rate by 25 bps to 6.25 per cent
The Reserve Bank of India (RBI) hiked the repo rate to 25 basis points to 6.25% from the earlier 6% in the June bi-monthly policy meet on Wednesday.
The reverse repo rate has also been adjusted to 6 per cent and the bank rate has been kept at 6.50 per cent.
The RBI's six-member committee voted to hike the central bank's repo rate, or the rate at it which lends to banks, by 25 basis points, to 6.25% from 6% earlier in its second bimonthly monetary policy review of FY18.
RBI retained the GDP growth for the financial year 2018-19 at 7.4 per cent.
"The resulting pick-up in the momentum of inflation excluding food, fuel and HRA has imparted persistence into higher CPI (Consumer Price Inded) projections for 2018-19," RBI said in the policy.
The central bank revised upwards the retail inflation range to 4.8-4.9 per cent in the first half of 2018-19, and 4.7 per cent in the second half. It includes the impact from HRA for central government employees, with risks tilted to the upside.
With all the six members voting for a increase in policy rates, the Monetary Policy Committee raised "repo rate by 25 basis points and kept the stance neutral", RBI said in a statement.
Excluding the impact of HRA revisions, CPI-based inflation is projected at 4.6 per cent in first half of 2018-19, and 4.7 per cent in H2, RBI said.
"Crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook - both on the upside and the downside," it said.
The April policy RBI had projected CPI inflation for 2018-19 to be at 4.7-5.1 per cent in H1 and 4.4 per cent in H2, which included the HR impact for central government employees.
The MPC had last slashed the benchmark lending rate by 0.25 percentage points to six per cent in August 2017.