The Reserve Bank of India today hiked its repo rate by 25 basis points, for the second consecutive time. The repo rate is the rate at which the RBI lends money to commercial banks. An RBI repo rate hike usually sees commercial banks hike their respective interest rates on home, car and other loans.
The repo rate has been hiked from 6.25 per cent to 6.5 per cent. This is the second time in a row that the RBI has hiked its key lending rate. At its June meeting of the monetary policy committee, the central bank had hiked rates from 6 per cent to 6.25 per cent.
In a statement after today’s meeting, the RBI’s monetary policy committee said that the repo rate had been hiked with the objective of achieving a medium-term target for consumer price index inflation of 4 per cent, while supporting growth.
This is the first time since October 2013 that the RBI has hiked its lending rate at two consecutive meetings.