Loans To Be Costlier, RBI Hikes Repo Rate By 0.25 PC

Continuing its efforts to check price rise, the Reserve Bank today raised key short-term lending and borrowing rates by 25 basis points for the 10th time since March, 2010, a move that could make auto and home loans expensive.

While the short-term lending (repo) rate has been raised to 7.5 per cent, the borrowing rate has been hiked to 6.5 per cent.

Subsequently, the marginal standing facility (MSF) has also gone up by 25 basis points to 8.50 per cent.

Other rates and ratios have been kept unchanged.

The policy initiative, the RBI said, “is expected to contain inflation and anchor inflationary expectations by reining in demand side pressures.”

Inflation stood at over 9 per cent in May, much above the central bank’s comfort level of 5-6 per cent.

From: http://ping.fm/HBrDC