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RBI hikes repo rate to 6.25%, EMI set to become costly

In its bi-monthly monetary policy held on Wednesday, the Reserve Bank of India (RBI) hiked the repo rate by 25 basis points. With the announcement, the repo rate now stands at 6.25%. Along with this reserve repo rate has also been hiked to 6%.

The repo rate is the rate of interest at which the RBI loans money to other banks. The repo rate then determines the rate of interest at which the banks loan money to their customers. A hike in the repo rate will mean an increase in the EMIs of people who have borrowed money at fluctuating rates.

Now that the RBI has announced a hike in repo rate, banks, too, could start raising their marginal cost-based lending rates (MCLR) soon. Many banks have already started raising rates over the past week. State Bank of India (SBI), the country’s largest lender, has already hiked the interest rate twice this year.

The RBI meanwhile projected inflation for 2018-19 at 4.8- 4.9% in the first half and 4.7% in the second half of the year. Its GDP projection was 7.5-7.6% for the first half and 7.3-7.4% in the second half.

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Karnataka CM Kumaraswamy expands cabinet ministry

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Karnataka chief minister HD Kumaraswamy carried out the first expansion of his cabinet on Wednesday, including nine leaders from the Janata Dal (Secular) or JD (S) and 14 of the Congress in the coalition government as well as one each from the BSP and the KPJP.

H.D. Revanna, son of JDS chief and former prime minister H.D. Deve Gowda and state senior Congress leaders D.K. Shivakumar were among those who took the oath. Governor Vajubhai Vala administered the oath of office and secrecy to the new ministers at a ceremony in Raj Bhavan.

The new ministers took oath after days of hectic parleying between the ruling coalition partners, the JD(S) and the Congress. The two rival parties had stitched up a post-poll alliance at the state level after the May 12 assembly polls yielded a fractured mandate, in order to keep the single largest party, the BJP, out of power in the state.

Actor-turned-politician Jaimala Ramachandra from the Congress took the oath of office too. She is the only woman MLA to be sworn in today. She created a controversy in 2006 by claiming to have entered the Ayyappa temple at Sabarimala during her prime and touching the idol of the presiding deity.

The sources said earlier that the Congress, which had a long list of ministerial aspirants, is likely to keep four or five berths vacant. This is part of a strategy to meet any exigencies of dissidence that may crop up after the expansion. The JD(S), too, has decided not to fill all its Cabinet berths in one go.

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