RBI ups repo, reverse repo by 50bps, CRR kept unchanged

In a bid to clamp down on resurgent inflation, the Reserve Bank of India, in its first monetary policy review of 2012, raised repo and reverse repo rates by 50 basis points, thus breaking its calibrated approach.

The cash reserve ratio (amount of funds that banks have to keep with RBI), however, has been left unchanged at 6%.

The central bank in its annual policy on Tuesday said that over the long run, high inflation is inimical to sustained growth as it harms investment by creating uncertainty.

"Current elevated rates of inflation pose significant risks to future growth. Bringing them down, therefore, even at the cost of some growth in the short-run, should take precedence," governor D Subbarao said.