The Reserve Bank of India has raised the repo rate and reverse repo rate by 25 basis points in its mid-quarter monetary policy review to check inflation. Inflation has shot up from 9.2 per cent in July to 9.8 per cent in August this year.The repo rate has been hiked to 8.25 per cent from 8 per cent, while the reverse repo rate has been hiked to 7.25 per cent from 7 per cent. The marginal standing facility rate has also been hiked to 9.25 per cent from 9 per cent. However, the Cash reserve ratio has been kept unchanged at 6 per cent. This is the 12th rate hike in 18 months since March 2010.The RBI also stated that GDP growth has decelerated to an 18-month low of 7.7 per cent in the first quarter of 2011-12 from 7.8 per cent in the previous quarter and 8.8 per cent in the corresponding quarter a year ago.The RBI stated in the review that in the current scenario, with the likelihood of inflation remaining high for the next few months, rising inflationary expectations remain a key risk and this makes it imperative to persevere with the current anti-inflationary stance. However, the central bank said inflationary pressures are expected to ease towards the later part of 2011-12 and stabilisation of energy prices and moderating domestic demand should facilitate this process.AIR correspondent reports, that, with the increase in repo rate, borrowing from RBI will become more expensive, hence all loans – personal and corporate – are likely to become costlier and home loan EMIs will increase once banks hike their base rate.