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The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) on Wednesday hiked the repo rate by 25 basis points to 6.50 per cent.

Wednesday's MPC meeting is the last one for this fiscal.

The repo rate is the rate at which the RBI lends to the banks.

Announcing the hike, RBI Governor Shaktikanta Das said the MPC decided to hike the policy rate by 25 bps to 6.5 per cent.

As expected, there was a split in the rate hike decision with four members voting for the hike and two against.

He said the 25 bps hike was considered correct at this juncture. It also provides an elbow room to look at the incoming data.

According to Das, after the repo rate hike the standing deposit facility (SDF) rate stands adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent.

He said the MPC also decided to keep a vigil on the inflation rate and it remains within the band.

Das said the inflation is expected to be around 5.6 per cent during the fourth quarter of FY23.

On the growth front, Das said the gross domestic product (GDP) is expected to grow at 6.4 per cent during 2023-24 with Q1 growth rate at 7.8 per cent, Q2-6.2 per cent, Q3 6 per cent and Q4 5.8 per cent and the risks are evenly balanced.

According to him, the inflation for the current fiscal 2022-23 will be at 6.5 per cent and for Q4 at 5.7 per cent.

As regards the CPI inflation for next fiscal, that is, 2023-24 at 5.3 per cent with Q1 at 5 per cent, Q2 5.4 per cent, Q3 5.4 per cent and Q4 5.6 per cent.