RBI policy

10 key take aways from MPC’s rate hike

RBI raised its key lending rate by 25 basis points to 6.5 percent, keeping its focus firmly on taming inflation, but sounded bullish about the broader economy’s prospects.

Reserve Bank of India's (RBI’s) Monetary Policy Committee (MPC) obliged the market by giving what was expected from it -- a hike in repo rate by 25 basis points.

 On August 1, all members of the MPC, except Ravindra Dholakia, voted to hike the repo rate to 6.50% while keeping the policy stance unchanged at "neutral".

The bond market did not register the tremor, but the Bank Nifty showed some initial selling pressure.

However, while the interest rate hike was a given as the central bank was behind the rate curve, it was always commentary that mattered.

Here are 10 key takeaways from the policy:

Rate hike to control inflation: The decision taken by MPC was to maintain the medium-term target for consumer price index (CPI) inflation of 4 percent within a band of +/- 2 percent without disturbing the growing economy.