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RBI hikes key policy rates by 0.25 percent, loans to get costlier

The Reserve Bank of India (RBI) on Tuesday hiked key policy interest rates by 0.25 percent to tame inflation. 

Mumbai: RBI's move to hike interest rates by 0.25 percent would make home, automobile and other loans costlier and further dampen industrial growth.


RBI office in Mumbai. File pic

The repo rate, what banks pay when they borrow money from the RBI to meet their short-term requirements, was increased to 8 percent from 7.75 percent per annum.

The reverse repo rate that the RBI pays to commercial banks when they park their surplus short-term funds with the central bank, has been adjusted to 7 percent.

In its third quarter review of the monetary policy, the RBI also hiked the marginal standing facility rate by 0.25 percent to 9 percent.

However, the cash reserve ratio (CRR) has been kept unchanged at 4 percent.

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