Mumbai, August 1: The Reserve Bank of India (RBI) on Wednesday hiked the repo rate by 25 basis points to 6.50 percent and reverse repo rate was hiked to 6.25 percent. The marginal standing facility rate and Bank Rate was also adjusted to 6.75 percent. The MPC kept the policy neutral. The GDP growth projection for 2018-19 remained the same as it was in June, i.e., 7.4 percent. The GDP growth for 2019-20 is projected at 7.5 percent.

The decision to hike key interest rates comes amid a hike in crude oil prices and rising inflation, which are considered to be the key factors in decision-making. RBI Governor Urjit Patel held a press meet and said that the MPC reiterates its commitment to achieving the medium-term target for headline inflation of 4 percent on a durable basis.

The Reserve Bank’s six-member monetary policy committee (MPC) had earlier in June hiked the repo rate by 25 basis points to 6.25 percent and reverse repo rate to 6 percent.

Apart from hikes in repo and reverse repo rates, the RBI had also projected inflation for 2018-19 at 4.8- 4.9 per cent in the first half and 4.7 per cent in the second half of the year. The projection for GDP was 7.5-7.6 per cent in first half and 7.3-7.4 in the second half.

The RBI’s six-member committee has been entrusted with the task of setting the benchmark interest rate after an amendment was passed through the Finance Act, 2016. Prior to the establishment of the MPC, the RBI Governor was responsible for setting the interest rate.

(The above story first appeared on LatestLY on Aug 01, 2018 02:34 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).