Reserve Bank of India today raised the key policy rate by 0.25 per cent to 8 per cent in a bid to curb inflation. The move that may translate into higher EMIs and push up the cost of borrowing for Corporates.

Releasing the Third Quarter Review of Monetary Policy in Mumbai today, RBI Governor Raghuram Rajan said, the reverse repo rate under the liquidity adjustment facility will be revised to 7 per cent. However, the RBI kept the cash reserve ratio unchanged at 4 per cent as liquidity seems to be comfortable. Mr Rajan said, Consumer Price Index is too high and we need to bring it down.

Addressing the post policy press conference in Mumbai, the RBI Governor said RBI is cognizant of the weak economy and that the best way to sustain growth is bringing down inflation. He said economic growth will be below 5 per cent in the current financial year and the slowdown is increasingly worrisome.

The Governor said GDP growth will be below 5 per cent in the current financial year and can accelerate to 5.5 per cent next finacial year.