Mumbai, Aug 1(DC): The six-member Monetary Policy Commitee (MPC), chaired by RBI Governor Urjit Patel, started its three-day discussions from 30th July, 2018, for decision on key interest rates amid rising oil prices and inflation floating around 5 per cent. The government has dictated RBI to keep inflation around 4 per cent.

The MPC was meeting for its third bi-monthly Monetary Policy Statement for the year 2018-19. Reserve Bank of India has decided to hike the repo rate by 25 bps from 6.25 per cent to 6.50 per cent. It has hiked the repo rate for the second consecutive month.

RBI's Monetary Policy Committee hikes the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.5 per cent. Consequently, the reverse repo rate under the LAF stands adjusted to 6.25 per cent and marginal standing facility rate and Bank Rate to 6.75 per cent. As per reports from ANI.

The retail inflation has rised to five-month high from 4.87 per cent in May to 5.0 per cent in June due to rising fuel prices and weakening rupee against dollar. The Indian Rupee on 20th July, 2018, plunged to all-time low of Rs 69.12 against the US dollar. June has been the eighth straight month in which RBI has missed its medium-term target on inflation of 4 per cent.

The State Bank of India's interest rate hike decision had come ahead of the RBI monetary policy announcement, it has from 30th July, 2018, raised the interest rates on fixed term deposits. The rates has been hiked to an extent of 10 basis points.

The Reserve Bank of India in its monetary policy meet in June decided to hike the key interest rates from 6.0 per cent to 6.25 per cent. The 0.25 per cent rise in interest rates came after a prolonged period of four-and-a-half-years.

The six-member MPC, headed by RBI Governor Urjit Patel, also hiked the reverse repo rate to 6.0 per cent. The repo rate is the rate at which RBI lends money to other banks, and reverse repo rate is the rate at which RBI borrows from other banks.