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The Reserve Bank of India (RBI) on Wednesday hiked the key benchmark policy rate by 25 basis points to 6.5%, citing sticky core inflation.

This is the sixth time the interest rate has been hiked by the RBI since May last year, taking the total quantum of the hike to 250 basis points.

Announcing the bi-monthly monetary policy, RBI Governor Shaktikanta Das said the Monetary Policy Committee (MPC), by a majority, decided to raise the policy repo rate by 25 basis points and keep a ‘strong vigil’ on the inflation outlook.

“Policy rate at 6.5% still trails the pre-pandemic level,” Das said, adding that core inflation will remain sticky.

Core inflation generally refers to inflation in manufactured goods.

The governor said the inflation will moderate in the next fiscal but remain above the 4% level. The RBI is mandated to keep inflation at 4% with a margin of 2% on either side.

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For the next fiscal, the RBI projected a growth rate of 6.4%. In the latest Economic Survey of the finance ministry, the growth projection was 6-6.8% for 2023-24.

According to the governor, retail inflation will average 6.5% in the current fiscal and moderate to 5.3% in 2023-24.

The Indian economy has remained resilient demand global headwinds, he said.