New Delhi: The Reserve Bank of India (RBI), in its first quarter review of the monetary policy, hiked the repo and reverse repo rates by 25 and 50 basis points, respectively. This is the fourth hike in the key policy rates in 2010.

The repo rate (the RBI's short-term lending rate to banks) stands at 5.75 per cent and the reverse repo rate (the RBI's short term borrowing rate) at 4.50 per cent.However, lending rates are unlikely to go up before October.

The cash reserve ratio (CRR), a portion of deposits that banks have to maintain with the RBI has been left unchanged at 6 per cent.

The RBI said that credit and deposit growth will evolve along the projected trajectory, as indicated in the April policy statement, of 20 per cent and 18 per cent, respectively, in 2010-11.

In a press conference Dr D. Subbarao, Governor, RBI, said "As credit demand picks up, liquidity becomes tighter and other monetary policy actions start playing out, we expect both deposit and lending rates to go up."

Furthermore, Dr Subir Gokarn, Deputy Governor, said credit is expected to pick up more firmly in the second half of the year and as this happens the incentive, to start raising rates will be stronger.

There will be no immediate impact of the rate hike on auto and home loans, as per O.P. Bhatt, Chairman, State Bank of India and Chairman, Indian Banks' Association.

Moreover, the gross domestic product (GDP) growth projection for 2010-11 has been revised to 8.5 per cent from 8.0 per cent as per the previous estimates in April 2010, indicating that the economy is steadily reverting to its growth trajectory.