RBI Hikes Repo Rate by 50bps + CRR by 25bps

Breaking NewsThe RBI has tightened money supply in the Indian markets by raising the CRR by 25 bps and in a surprise move raised the repo rate by 50 bps taking it to 9.0% [This is the rate at which banks will borrow from RBI] We had expected a 25bps repo rate hike.

GDP growth projection for 2008-09 revised from the range of 8.0-8.5 per cent to around 8.0 per cent, barring domestic or external shocks. While the policy actions would aim to bring down the current intolerable level of inflation to a tolerable level of below 5.0% as soon as possible and around 3.0 per cent over the medium-term, at this juncture a realistic policy endeavour would be to bring down inflation from the current level of about 11.0-12.0 per cent to a level close to 7.0% by March 31, 2009.

The Indian Stockmarket has reacted sharply to the news and the BSE SENSEX was down 500 points. Banking and Real Estate Stocks are the worst Hit.

One thought on “RBI Hikes Repo Rate by 50bps + CRR by 25bps

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