RBI raises repo and reverse repo rates.

Bogged with inflation concerns, RBI has raised its repo rate and reverse repo rates under the liquidity adjustment facility.

• Repo rate increased by 25 basis points to 6.0%, and
• reverse repo rate increased by 50 basis points to 5.0%

RBI says...

The measures undertaken in this review should:
- contain inflation and anchor inflationary expectations without disrupting growth.
- reduce the volatility in overnight call money rates, thereby strengthening the monetary transmission mechanism.
- continue the process of normalisation of the monetary policy instruments.

The decision was announced by the Reserve Bank of India at the Mid-Quarter Monetary Policy Review, today.

Reacting to the RBI's measures, some bankers have already said that they would have to raise their commercial lending and deposit rates.