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RBI raises repo rate to 5.50%, first hike in nearly four years
India's central bank unanimously raised the benchmark repo rate by 25 basis points to 5.50% and shifted its stance from neutral to 'calibrated tightening', while lifting its FY2026-27 GDP growth forecast to 7.1% and inflation forecast to 5.2%.
Why it matters
This is the Reserve Bank of India's first rate hike since February 2023, ending nearly four years of on-hold or easing policy and signalling that the central bank is now prioritising inflation control. India's August CPI rose to 4.82% from 4.45% in July, while crude oil above US$100 a barrel amid the West Asia crisis has intensified inflation pressure.
Full report
On Wednesday, October 7, the six-member Monetary Policy Committee voted unanimously to raise the benchmark repo rate by 25 basis points to 5.50%, following the 63rd MPC meeting (October 5–7) chaired by Governor Sanjay Malhotra. The Standing Deposit Facility rate stands at 5.25%, and the Marginal Standing Facility rate and bank rate were raised to 5.75%. The committee also shifted its policy stance from neutral to "calibrated tightening", indicating further tightening is possible depending on the evolving inflation and growth outlook.
The RBI raised its real GDP growth forecast for fiscal 2026–27 from 6.7% to 7.1% while lifting projected CPI inflation to 5.2%, citing resilient domestic growth and rising food, fuel and fertiliser prices. Indian equities slipped after the announcement: around midday IST, the Sensex was down 0.14% at 72,964.29 and the Nifty fell 0.32% to 22,703.60. SBI Research had said the balance of risks tilted toward a pre-emptive 25-bp hike, arguing it was "prudent to act pre-emptively rather than be behind the curve".
Sources: thehindubusinessline.com; IANS via dailyworld.in.
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