RBI hikes repo rate by 0.25 bps points to 6.5%, loan EMIs may rise

New Delhi: The Reserve Bank of India (RBI) on Wednesday hiked the repo rate by 25 basis points to 6.50 per cent while maintaining a neutral stance on the stability in the market.

The six-member Monetary Policy Committee (MPC) said that its decision is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent.

The MPC added that the volatility in global financial markets continues to impart uncertainty to the inflation outlook. Highlighting the inflation, the MPC projected 4.6 per cent in Q2FY19, 4.8 per cent in H2 of FY19 and 5 per cent in Q1FY20.

The MPC also said that in case there is a fiscal slippage at the centre or state level, it could have adverse implications for market volatility, crowd out private investment and impact the outlook for inflation.

In the last policy, the RBI has projected the real Gross Domestic Product (GDP) growth in FY19 is seen at 7.4 per cent as against 6.6 per cent in FY18. The apex bank said that the models suggest FY20 real GDP growth will range from 7.4 per cent to 7.9 per cent.

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