Highlights: RBI Q3 FY14 monetary policy review

In a surprise move, the Reserve Bank of India (RBI) on Tuesday hiked key policy interest rates by 0.25 per cent to tame inflation. The move would make home, automobile and other loans costlier and further dampen industrial growth.

The repo rate, what banks pay when they borrow money from the RBI to meet their short-term requirements, was increased to 8 per cent from 7.75 per cent per annum.

The reverse repo rate that the RBI pays to commercial banks when they park their surplus short-term funds with the central bank, has been adjusted to 7 per cent.

In its third quarter review of the monetary policy, the RBI also hiked the marginal standing facility rate by 0.25 per cent to 9 per cent.

However, the cash reserve ratio (CRR) has been kept unchanged at 4 per cent.

Key takeaways

-CPI inflation remains high
-Upside to risk 8 per cent inflation forecast
-MSF, bank rate adjusted to 9 per cent
-CRR unchanged at 4 per cent
-Slowdown in economy worrisome, says RBI Governor Raghuram Rajan
-FY15 CAD gap seen below 5 per cent of GDP
-Nifty falls 44.80 points
-CPI inflation to be above 9 per cent fo FY14
-Inflation may soften in Q4, upside risks in FY15
-Global recovery gaining traction led by US economy
-Expect FY15 GDP growth at 5.5 per cent
-Monetary policy review to be undertaken in two months cycle, next review on April 1, 2014
-If inflation moves as expected, this may be the last rate hike: C Rangarajan
- Monetary policy reviews to be according to Urijit Committee recommendations
-Expect reserve to swell further going further: Rajan
-Clear sign of recovery yet to emerge, uptick seen in FY15: Rajan
-Hikes in rates consistent with December guidance: Rajan
-Nifty recovers after breaching 6,100 first time since Nov

With IANS inputs