<p>The Reserve Bank of India (RBI) has hiked the repurchase rates (repo rates) for the second consecutive time on the back of inflationary pressures arising due to a hike in the minimum support price (MSP).</p>.<p class="bodytext">The Monetary Policy Committee (MPC) voted to keep its policy stance neutral, thus keeping the door open for future rate hikes.</p>.<p class="bodytext">The apex bank raised the repo rate by 25 basis points to 6.5%. RBI also raised the average inflation projection for the second half of the year to 4.8% from 4.7% in June. The central bank expects inflation to edge higher to reach 5% in the first quarter of the next fiscal year.</p>.<p class="bodytext">The six-member MPC voted in favour of the the decision by 5:1 vote. While Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral Acharya and RBI Governor Urjit Patel voted in favour of the decision, Ravindra Dholakia voted against the decision.</p>.<p class="bodytext">Earlier in June, the bank hiked the repo rate by 25 basis points (bps) to 6.25%.</p>.<p class="bodytext">With Wednesday's hike, the repo rate has reached to its highest level since October 4, 2016, when the apex bank had revised it to 6.25% from 6.5%.</p>.<p class="bodytext">The RBI move back then had come after a span of four years and was prompted by inflationary pressures arising out of a rise in crude oil prices.</p>.<p class="bodytext">The monetary policy statement has attributed the implementation of the Minimum Support Price hike as the primary factor that has stoked inflation this year.</p>.<p class="bodytext">“This increase in MSPs for kharif crops, which is much larger than the average increase seen in the past few years, will have a direct impact on food inflation and second round effects on headline inflation,” the RBI said in its policy statement.</p>.<p class="bodytext">The government had earlier fixed the MSP at 150% of the cost of production of all kharif crops.</p>.<p class="bodytext">The apex bank's rate hike also highlighted its concerns over crude oil prices as they remain on the higher side despite seeing a slight correction.</p>
<p>The Reserve Bank of India (RBI) has hiked the repurchase rates (repo rates) for the second consecutive time on the back of inflationary pressures arising due to a hike in the minimum support price (MSP).</p>.<p class="bodytext">The Monetary Policy Committee (MPC) voted to keep its policy stance neutral, thus keeping the door open for future rate hikes.</p>.<p class="bodytext">The apex bank raised the repo rate by 25 basis points to 6.5%. RBI also raised the average inflation projection for the second half of the year to 4.8% from 4.7% in June. The central bank expects inflation to edge higher to reach 5% in the first quarter of the next fiscal year.</p>.<p class="bodytext">The six-member MPC voted in favour of the the decision by 5:1 vote. While Chetan Ghate, Pami Dua, Michael Debabrata Patra, Viral Acharya and RBI Governor Urjit Patel voted in favour of the decision, Ravindra Dholakia voted against the decision.</p>.<p class="bodytext">Earlier in June, the bank hiked the repo rate by 25 basis points (bps) to 6.25%.</p>.<p class="bodytext">With Wednesday's hike, the repo rate has reached to its highest level since October 4, 2016, when the apex bank had revised it to 6.25% from 6.5%.</p>.<p class="bodytext">The RBI move back then had come after a span of four years and was prompted by inflationary pressures arising out of a rise in crude oil prices.</p>.<p class="bodytext">The monetary policy statement has attributed the implementation of the Minimum Support Price hike as the primary factor that has stoked inflation this year.</p>.<p class="bodytext">“This increase in MSPs for kharif crops, which is much larger than the average increase seen in the past few years, will have a direct impact on food inflation and second round effects on headline inflation,” the RBI said in its policy statement.</p>.<p class="bodytext">The government had earlier fixed the MSP at 150% of the cost of production of all kharif crops.</p>.<p class="bodytext">The apex bank's rate hike also highlighted its concerns over crude oil prices as they remain on the higher side despite seeing a slight correction.</p>