The RBI raised interest rates by a higher-than-expected 50 basis points on Tuesday, stepping up its fight against persistently high inflation despite slowing growth in India.
The RBI increased the repo rate, at which it lends to banks, to 8%, exceeding market expectations that it would raise rates by 25 basis points.
The State Bank of India (SBI) said that it would pass on the rate hike to the customers. The Non-Performing Assets (NPAs) from the rate sensitive sectors may be accelerated, SBI chairman Pradip Chaudhari said addressing a press conference.
HDFC bank said that after the RBI policy rate hike today, it is likely that the interest rates would go up 'very quickly'.
While the finance minister Pranab Mukherjee has said that the rate hike is a strong signal to tame the rising inflation and that it has softened, particularly the food prices have cooled down in the recent months. He also added that the government sees inflation ease to 6-7% by year-end.
The RBI today raised key interest rates under the Liquidity Adjustment Facility (LAF) by 25 basis points.
src-BS
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