RBI Hikes Repo Rate By 25 Basis Points To 6.5%

Mumbai: The Reserve Bank of India (RBI) on Wednesday hiked key benchmark policy rate by 25 basis points to 6.5 per cent, citing sticky core inflation.

This is the sixth time interest rate has been hiked by the RBI since May last year, taking the total quantum of hike to 250 basis points, sources said.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC) by a majority decided to raise the policy repo rate by 25 basis points and keep a ‘strong vigil’ on inflation outlook.

Policy rate at 6.5 per cent still trails the pre-pandemic level, Das said, adding that core inflation will remain sticky.

With the latest repo rate hike, the MPC has cumulatively upped the key policy rate by 250 basis points since May 2022.

The latest hike comes in the backdrop of retail inflation cooling down to a 12-month low of 5.72 per cent in December 2022, sources said, adding that index of industrial production also surged to a five-month high of 7.1 per cent.

While the economy is holding up, weak external demand could prove to be a drag on growth, they added.