RBI raises repo rate by 25 bps to 8 per cent

"The gravest risk to the value of the rupee is from CPI (consumer price index) inflation which remains elevated at close to double digits, despite the anticipated disinflation in vegetable and fruit prices," Rajan said. If RBI can bring inflation down, "that will give us some room on the monetary front which can then be passed through. But first let's fight the fight that needs to be fought", he said.

 The repo rate, at which banks borrow short-term money from RBI, was raised by 25 basis points, or 0.25 percentage point, to 8 per cent. The reverse repo, at which RBI borrows from banks, was raised 25 basis points to 7 per cent. The marginal standing facility, the penal rate of interest for banks, was raised 25 basis points to 9 per cent to maintain the corridor. The cash reserve ratio was unchanged at 4 per cent...

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