The monetary policy committee raised the repo rate by 25 basis points to 6.50 per cent, in line with predictions by 37 of 63 economists in a Reuters poll last week.
An RBI repo rate hike usually sees commercial banks hike their respective interest rates on home, vehicle and other loans.
The decision to raise interest rates was widely expected by economists but views on whether or not the hike was justified were decidedly mixed.
Canary Wharf is home to some of the UK's banks, which will be deciding what to do with the rates on the mortgage and savings products in the coming days.
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Mr Carney said the "modest" rise in interest rates was an appropriate response to inflation which is still rising faster than its two per cent target.
"Weather effects - both the snow-related disruption in February and March and the unseasonably warm weather and long sunshine hours in May and June - seemed to have accounted for around half of the second quarter rise", it added.
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SNP economy spokesperson Kirsty Blackman MP added: "The hike in interest rates will deliver a further blow to the living costs and standards of millions of families across the United Kingdom, who are already feeling the squeeze as prices rise too fast".
Inflation is a worry: Good monsoon and a higher-than-usual increase in government-guaranteed price for crops will raise farmers' income, then rural demand and then inflation.
HSBC is upping its rate today while Lloyds and Halifax, the UK's biggest mortgage lender, plan to do so next month.
However, the policy committee signaled that it was in no hurry to raise them further with an uncertain Brexit on the horizon.
Other central banks have similarly signaled that future policy moves will be gradual and limited, highlighting officials' concern that withdrawing stimulus too quickly could derail growth. "For example, the average five-year fixed rate has increased by just 0.05% since November 2017 stand at 2.93% today". "Steel consumption also accelerated in May", the central bank said in a media release.
Vijay Valecha, chief market analyst at Century Financial Brokers, said NRIs can, however, benefit from a higher interest rate on fixed deposits.
According to the Nationwide Building Society, anyone on a standard variable rate will see an increase of £12 on a mortgage of £100,000 and on a £200,000 mortgage, £25.
They project the consumer price index will rise to 2.5% by September 2018 before falling to 2.2% by the same time in 2019, 2.1% by the same time in 2020 and 2% by the end of September 2021.