For the second consecutive year, the Reserve Bank of India (RBI)

Reserve Bank (RBI) has increased its policy rates by 0.25 percent in the Bimanthi Policy Review. Thus, the repo rate under the liquidity adjustment facility (LAF) has been increased to 6.50%. According to the statement issued by ABBI, this increase in repo rate has been done considering the current macroeconomic situation. After this change, almost all types of loans, including home loans, are likely to be expensive. Thus, under the LAF, reverse repo rate of 6.25 percent and marginal standing facility (MSF) rate and bank rate has been increased to 6.75 percent.

Increased repo rate in second bimanthali meeting continuously
5 Members of RBI's Monitoring Policy Committee (MPC) voted in favor of raising the repo rate and 1 member opposed it. Opposition member Ravindra Dholakia of the Committee voted against it. The hope of increasing the repo rate was already expected. This is the second consecutive time when the repo rate has been increased. Earlier, in the last monetary policy meeting held in June, the repo rate was increased by 0.25 percent.

Inflation affects inflation
The MPC meeting showed the tremendous impact on inflation concerns. In June, retail inflation had reached 5% level, which is the highest level of 5 months. During April-June, retail inflation was at an average of 4.8 percent. In view of this, the RBI has estimated the retail inflation of CPI for the period July-September ie CPI is 4.6%, whereas for the second half of the current financial year it has been estimated 4.8%, which was 4.7% earlier.

GDP growth forecast to be 7.4 percent in 2018-19
According to the RBI, during the period April-September, GDP growth is expected to be 7.5-7.6 percent. The central bank has kept GDP growth estimates at 7.4% for FY2018-19.

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