Loans to go costlier as RBI hikes key rates again, 11th time since Jan 2010

Today RBI raised interest rates by a higher-than-expected 50 basis points.  The Reserve Bank of India (RBI)  increased the repo rate , at which it lends to banks, to 8 per cent, exceeding market expectations that it would raise rates by 25 basis points. The rate increase is its 11th since March 2010, making the RBI one of the most aggressive inflation fighters among central banks.
Still, wholesale price index inflation was 9.44 per cent in June, more than double the central bank’s comfort level, and high prices are expected to persist in coming months.

The central bank, whose forecasts for inflation have proven optimistic in recent quarters, increased its outlook for wholesale inflation at the end of the fiscal year in March to 7 per cent, from 6 percent earlier.

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