In an unexpected step, the Reserve Bank has raised its short-term borrowing and lending rates by 25 basis points each after market hours on Friday. It has raised the reverse repo rate to 3.5% and the repo rate to 5% with immediate effect. The measures are intended to anchor inflationary expectations and check price pressures. Inflation in March is expected to touch 10.2%.
Were bankers taken by surprise?
Though S Chakravarty, Chief Economist, Standard Chartered Bank, was anticipating an increase in repo and reverse repo, he was expecting the move in its April Policy meet. Abheek Baruah, Chief Economist, HDFC Bank, too was expecting a hike in April.
In an unexpected step, the Reserve Bank has raised its short-term borrowing and lending rates by 25 basis points each after market hours on Friday. It has raised the reverse repo rate to 3.5% and the repo rate to 5% with immediate effect. The measures are intended to anchor inflationary expectations and check price pressures. Inflation in March is expected to touch 10.2%.
