Reserve Bank of India (RBI) has today announced a hike in the short term lending borrowing rate. It is believed that this step by RBI will make it difficult for one to book a home or auto loan.

It has been revealed that RBI has increased the repo rate to 7.5% however the borrowing rates have been increase to 6.5%. As a result of hike in repo rate and borrowing rate, the marginal standing facility has also gone up to 8.50%. Since March 2010, it is for 10th time when the repo rates have been augmented.

RBI has told that hike in the rates were implemented keeping in mind the growing threat of inflation. It has been told that inflation for the month of May stood at 9% which is much above the bank’s comfort levels of 5-6%.

RBI said that these measures will help nation to fight the global inflation. The Central Bank further said that they will continue to support such practice until the rising prices of commodities come under the control. It said, “Based on the current and evolving growth and inflation scenario, the RBI will need to persist with its anti-inflationary stance of monetary policy”.