RBI hikes repo rates by 25 basis points

RBI governor Urjit Patel. Some economists say RBI could revise upward its inflation target for the second half of the year

It forecasts that growth rebounded to 0.4 per cent in the second quarter, with data pointing to a similar rate of growth between July and September.

Institute director Professor Graeme Roy said: "The interest rate rise - to the highest rate since 2009 - marks an important milestone in the UK's recovery from the financial crisis".

What do you want to know about the interest rates rise?

Given that a rate hike is nearly a foregone conclusion, other parts of the MPC's decisions, and the minutes of the meeting are likely to provide more intrigue.

The MPC said momentum in domestic economic activity continued to be sustained and the output gap had virtually closed. Five votes are needed to change policy.

A survey published by the British Chambers of Commerce on Thursday showed half of British firms planned to increase pay by more than 2 percent over the next year, echoing other signs of a slow improvement in pay growth.

Carney was due to give a news conference to explain the central bank's latest thinking at 1130 GMT. This means savers must be on the ball to ensure they get the best possible deal. RBI can also give assistance to any bank by means of the grant of a loan or advance, direct banks to call a meeting of its directors for the goal of considering any matter relating to or arising out of the affairs of the bank; or require an officer of the bank to discuss any such matter with an officer of the RBI and appoint one or more of its officers to observe the manner in which the affairs of the bank or of its offices or branches are being conducted and make a report thereon. The most that savers are likely to see is increases to 0.3% or 0.4%, as the banks use the rate rise to widen their net interest margin and increase their profits.

In reality, however, it's not so simple.

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"They can expect a rise to their savings, albeit a small one".

"We think the bank wants to raise rates in a gradual way and that would be consistent with the next one in February", he said.

Cheaper mortgage deals in recent years have also encouraged people to lock in promotional rates.

Fixed-rate mortgages started to rise after November's increase.

Kundu said he expects India to hike rates again before the fiscal year ends in March 2019.

"Subsiding consumer and business confidence, especially in forward looking gauges, together with the responses to the Ipsos Mori opinion poll, suggest strongly in our view that private sector economic agents are increasingly and demonstrably not behaving in this way", Wraith concluded. "Actual inflation outcomes have been slightly below the projected trajectory as the seasonal summer surge in vegetable prices has remained somewhat muted in comparison with its past behaviour and fruits prices have declined", it said.

Millions of borrowers on variable rate mortgages will be affected by the decision, with a quarter-point rise adding around £16 a month or £192 a year to the average mortgage.

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