rbi warns of tough times raise key rates by 50 basis points
Warning of tough times ahead, the RBI today raised the key short term lending rate and savings bank rates by 50 basis points and advised the government to hike petroleum prices as soon as possible in line with the ruling global crude prices.
In view of uncertainity prevailing in the global market, the RBI, while announcing its annual Credit Policy, has pegged the growth outlook for 2011-12 at a lower level of 8 per cent as against the government’s projection of 9 per cent.
The RBI’s decision to increase its lending (repo) and borrowing (reverse repo) rates by 50 basis points to 7.25 per cent and 6.25 per cent respectively will raise the cost of home, auto and other loans.
"Current elevated rate of inflation pose significant risk to future growth.