First Shocking news from Raghuram Rajan

Raghuram Rajan hikes repo rate by 25 basis points. Reserve Bank of India Governor Raghuram Rajan on today (Friday Sep 20th, 2013) hiked the repo rate under the liquidity adjustment facility (LAF) is increased by 25 basis points from 7.25 per cent to 7.5 per cent with immediate effect. RBI said repo rate has been hiked to bring down inflation to tolerable level and further action may not be announced on policy day.

In his first monetary policy, Raghuram Rajan has reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 99 per cent of the requirement to 95 per cent effective from the fortnight beginning September 21, 2013. However, the CRR remained unchanged at 4.0 per cent.

The marginal standing facility (MSF) rate is reduced by 75 basis points from 10.25 per cent to 9.5 per cent with immediate effect. RBI said growth may pick up in October-March if infrastructural projects are on stream. it also said wholesale price index (WPI) rate will be higher than projected in rest of financial year 2014.

After announcement, the BSE Sensex lost 500 points and Nifty was down by over 160 points.

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