RBI hikes repo rate by 25 basis points; reverse repo revised to 6 %

The Reserve Bank of India (RBI) on Wednesday hiked the repo rate and reverse repo rate at 6.25 percent and 6 percent respectively.

Maintaining a neutral stance, the central bank's six-member Monetary Policy Committee (MPC), in its Monetary Policy Statement reiterated its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis.

"GDP growth is projected in the range of 7.5-7.6 percent in H1 and 7.3-7.4 percent in H2, with risks evenly balanced," stated the Monetary Policy statement.

Following this, the MPC maintained neutral stance in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent, while supporting growth.

MPC added that the crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook, both on the upside and the downside.

Meanwhile, the committee said adherence to budgetary targets by the Centre and States appears to ease upside risks to the inflation outlook considerably.