For the first time since January 2014, the Reserve Bank today announced a 25 basis point hike in the key policy rate.

In its second bi-monthly monetary policy review, the six member Monetary Policy Committee headed by RBI Governor Urjit Patel unanimously hiked the policy repo rate by 25 basis points to 6.25 percent. Consequently, the reverse repo rate under the liquidity adjustment facility now stands at 6 percent.

Repo rate is the rate at which RBI lends to banks generally against government securities while the reverse repo is the rate at which RBI borrows money from the banks. A rise in the repo rate can translate into banks charging their customers higher EMIs for home, auto and other loans.

AIR correspondent reports that in line with expectations, RBI today hiked the policy repo rate by 25 basis points to curb inflationary pressure from rising crude prices. While predicting a slight rise in inflation numbers, RBI has however retained its neutral policy stance and the GDP growth outlook at 7.4 percent for FY19.

The six member Monetary Policy Committee has noted that domestic economic activity is exhibiting sustained revival and investment activity is also recovering.

Addressing a press conference later in the day, RBI governor Urjit Patel said the forecast of normal monsoon for 2018-19 augurs well for agriculture sector adding that adherence to budgetary targets by the Centre and the states will also ease upside risks to the inflation.