Mumbai: Home, consumer and other loan rates are expected to go up with Reserve Bank announcing a hawkish credit policy hiking key short-term lending rate by 0.5% and mandatory cash reserve requirement by 0.25% to contain runaway inflation now at 11.89%.
The hike in Repo rate, Reserve Bank’s overnight lending rate to banks, would come into effect immediately, while the 0.25% increase in CRR, the percentage of amount banks are required to park with the apex bank, would be effective from the fortnight beginning August 30, 2008.
In its first quarterly review of its annual monetary policy this fiscal, the RBI also lowered economic growth projection to 8% from its earlier forecast of 8-8.5% in the face of difficult global economic situations.
RBI Governor Y V Reddy said that the main thrust of the policy would be to bring down inflation to 7% by March, 2009 from the high 11-12%, at present.
Earlier, the apex bank had set the attempt to bring down inflation close to 5% by end of this fiscal and lower it further to 4-4.5% with a medium-term objective of 3%.