India’s RBI Hikes Key Rates by 25 bps, as Expected
Thursday, June 16, 2021 4:41 AM

The Reserve Bank of India on Thursday raised the short-term lending (repo) rate by 25 basis points to 7.50 percent and the short-term borrowing (reverse repo) rate will move up by a similar margin to 6.5 percent, citing ongoing inflation pressures in the economy.

The move was in line with the consensus forecast of economists surveyed by Dow Jones Newswires. However, some expected the central bank might pause, given recent signs of cooling in the economy.

The RBI said, "The monetary policy stance remains firmly anti-inflationary, recognizing that, in the current circumstances, some short-run deceleration in growth may be unavoidable in bringing inflation under control."

"The RBI has sought to maintain an interest rate environment that moderates inflation and checks inflationary expectations," the finance ministry said in a statement, adding that this was on expected lines.

On Tuesday, wholesale May inflation came in at a stronger-than-expected 9.06 percent year-on-year, compared with 8.66 percent in April. Last month, the central bank hiked rates by a larger-than-expected 50 basis points, saying it was willing to sacrifice short-term growth to contain inflation.