Risk of no-deal Brexit 'uncomfortably high': BoE governor

Reserve Bank of India also raised the average inflation projection for the second half of the year to 4.8% from 4.7% in June

Repo rate is the rate at which the RBI lends money to commercial banks in the event of any shortfall of funds.

Replying to a question, Valecha said it is cheaper to get a loan in the UAE than in India despite this hike, although the US Federal Reserve is supposed to raise rates much more aggressively than the RBI.

After the result of the referendum, the Bank of England cut interest rates to 0.25% - and raised them back again last November - and Carney said this action had been justified as the United Kingdom economy had grown less quickly than the Bank would have expected without Brexit.

The Bank of England (BoE) has raised the interest rate in the United Kingdom for the second time in a decade. It may be noted that the central bank raised repo rate by 25 bps to 6.25 per cent in June, marking the first hike by the MPC in the last four years.

The decision was unanimous, with the Bank of England's Monetary Policy Committee (MPC) members voting 9-0 to increase interest rates.

The accusation was levelled at Carney after May's policy meeting, which many had expected would see a rate hike.

But the message for interest rates remained one of gradual and limited increases as the central bank saw inflation only a fraction above its 2 percent target over the next few years. "Three MPC members had dissented at the last BoE meeting, including Chief Economist Andrew Haldane, and key data releases since June, such as a healthy labour market report, will have strengthened the resolve of other Committee members".

"Whilst costs for Scottish households with variable interest rate mortgages will rise, the overall cost of borrowing remains low by historical standards".

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The Bank of England has raised interest rates to the highest level in nearly a decade.

Simultaneously, it raised average inflation projection for 2018 second half from 4.7% in June to 4.8%.

But it also said inflation - now running at 2.4 per cent - was set to rise slightly higher than it had predicted in May's set of forecasts after recent falls in the value of the pound and higher energy prices.

The Scottish Fiscal Commission, which determines the spending envelope for the Scottish Government, has forecast Scotland's GDP growth will stay below 1 per cent for five years.

Mr Carney said that if a no-deal Brexit were to happen, it would mean a disruption to trade and a disruption to economic activity, as well as higher prices for a period of time.

"There is only a very remote possibility that the BOE won't hike rates on Thursday", Kathleen Brooks, research director at Capital Index said in an email. While private banks want to take further market share, they still hold only a small part of the country's deposits, despite offering somewhat higher deposit rates than PSBs.

"Although underlying tone of RBI statement appeared balanced, inflationary risks and outlook highlighted by the central bank indicates hawkishness".

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