Following a cycle of rate cuts begun in January 2015, the RBI on Wednesday raised its key interest rate for the first time by 25 basis points to 6.25 per cent, a central bank announcement said.

"Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 6.0 per cent, and themarginal standing facility (MSF) rate and the Bank Rate to 6.50 per cent," the Reserve Bank of India said.

"The decision of the Monetary Policy Committee (MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent," it added.