Mumbai, June 11
The Reserve Bank of India today increased the repo rate under the Liquidity Adjustment Facility by 25 basis points to 8 per cent from 7.75 per cent with immediate effect, a press statement issued by the apex bank said this evening.
"On a review of the current macro-economic and overall monetary conditions and with a view to containing inflation expectations, it is essential to take appropriate action on an urgent basis," RBI said in its statement.
The apex bank noted that the year-on-year WPI-based inflation, which was 4.36 per cent on January 12, 2008, at the time of announcement of the Third Quarter Review for 2007-08, increased to 7.33 per cent on April 12, 2008 at the time of announcement of the Annual Policy Statement for 2008-09 and to a high of 8.24 per cent on May 24, 2008. Further, various measures of CPI inflation, which ranged from 4.8 to 5.9 per cent in January 2008 have increased to a range of 7.8 to 8.9 per cent in April 2008, the statement added justifying the higher repo rates.
This is the sixth repo rate hike since June 2006.
However, the apex bank has left the reverse repo rate untouched.
Repo rate is the short-term rate at which RBI lends money to banks against government
securities.
