RBI hikes key rates to tame inflation

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Mumbai: Interest rates on housing, automobile and corporate loans are set to rise with India’s central bank hiking key rates in its monetary policy for this year unveiled on April 20 to suck excess liquidity out of the system to tame inflation.
The Reserve Bank of India (RBI) also projected India’s growth for this fiscal at upward of 8 percent, against 7.2 percent as per the earlier projection, while the annual rate of inflation at the end of March 2011 is projected at 5.5 percent.
The new rates were unveiled by Subbarao before chief executives of commercial banks. The new repo and reverse repo rates are effective immediately, while cash reserve ration is to take effect from the week beginning April 24.
The following are the revised policy rates and reserve ratios of the central bank:
Bank rate: 6 percent
Repurchase (repo) rate: 5.25
Reverse repurchase rate: 3.75
Cash reserve ratio: 6 percent
Statutory liquidity ratio: 25 percent.

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