After Petrol Price Hike, Stage set For higher interest Rates

Friday, 16 September 2011, 20:01 IST
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Mumbai: India's central bank Friday hiked key rates by 25 basis points in the 12th such exercise since January 2010 to tame stubborn inflation, setting the stage for auto, housing and commercial loans to become dearer once again. The repurchase rate, or the interest the central bank levies on short-term borrowing by commercial banks, has been raised to 8.25 percent from 8 percent. Automatically, the reverse repurchase rate, or interest on short-term lending, gets hiked to 7.25 percent from 7 percent. The rate hikes were effected by Reserve Bank of India (RBI) Governor Duvvuri Subbarao during the mid-quarter review of the apex bank's monetary policy for this fiscal, amid high inflation rate that is nudging double-digit levels once again. Commercial banks are widely expected to pass on the interest rate burden to customers, which could made consumer and corporate loans dearer, even while raising the interest outgo on existing loans, along with a longer tenure for repayment.
Source: IANS