The repo rate is now at 7.75 per cent. He had also raised it by 25 bps in the mid-quarter review in September.Along expected lines, the Reserve Bank of India Governor hiked the repo rate by 25 basis points in the October monetary policy review today. Repo rate is the rate at which banks borrow short term funds from RBI. Inflation has been on the upswing during the past few months. Wholesale price index (WPI) inflation touched 6.46 per cent in September while consumer price index inflation was at 9.84 per cent. Both these measures have been way beyond the comfort level of the RBI.
MSF rate cut by 25 bps
The Governor has also cut the marginal standing facility (MSF) rate by 25 bps to 8.75 per cent. The corridor between the repo rate and the MSF rate is now back to 100 bps signalling the return to normalcy in currency markets.
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