RBI hikes short term rates by 25 basis points

The Reserve Bank of India today hiked its key short-term lending and borrowing rates to banks by 25 basis points to combat rising inflation, a move that could signal hardening of commercial lending rates.

The move to hike repo and reverse repo rates to 5% and 3.5% respectively comes barely a month before the RBI was to announce monetary policy for the year 2010-11.