RBI rate hike may affect growth: Pranab

Finance Minister Pranab Mukherjee onTuesday said the Reserve Bank's latest round of rate hike, which is aimed at curbingprice rise, will also have some impact on economic growth .

"I do hope that decision of RBI to enhance the reporate and reverse-repo rate by 25 basis points would have its impact oninflation. Of course, it would have some impact on growth also," Mukherjeetold reporters here.

In its policy review meeting today, the Reserve Bank ofIndia (RBI) hiked interest rates by 25 basis points. The short-term lending(repo) and borrowing (reverse-repo) rates now stand at 8.5 per cent and 7.5 percent, respectively.

RBI has also lowered its GDP forecast for the fiscal to 7.6per cent, from its earlier projection of 8 per cent.

Later in a statement, Mukherjee said RBI's policy"would help in getting us back to a more comfortable inflation situationsoon while leaving scope for growth to pick up in the second half of currentfiscal year".

He said the decision has been taken by RBI to affirm itscommitment to tackle inflation as the headline inflation is still high.

The headline inflation has remained above the 9 per centmark since December 2010. In September it was 9.72 per cent.

With today's hike, RBI has raised its key policy rate 13timed since March 2010 to control inflation.

This is turn is getting reflected in industrial productionfigures as funds are getting costlier. Industrial production grew by 5.6 percent in the April-August period, as against 8.7 per cent in the correspondingperiod a year ago.

Mukherjee said the rate hike would have its implications oncredit costs and investment growth. "We are looking at all options forstrengthening investment sentiments in the coming months," he added.