The Reserve Bank on Wednesday hiked its short term lending rate by 0.25 per cent with immediate effect, a move that is likely to force banks to increase interest rates and help check inflation.
"The Reserve Bank of India has decided to increase the repo rate by 25 basis points to 8.00 per cent from 7.75 per cent with immediate effect," the central bank said in a statement in Mumbai.
The reverse repo rate, at which RBI borrows money from banks in exchange of the government papers, however, has been kept in tact at six per cent.
The Reserve Bank said the decision has been taken with a view to containing inflation expectations among other things.
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