The Monetary Policy Committee unanimously raised the rate by 25 basis points and shifted its policy stance from neutral to “calibrated tightening.”
The Reserve Bank of India raised its repo rate by 25 basis points, from 5.25% to 5.50%. All six members of the Monetary Policy Committee voted for the increase at their October 7 meeting. It was the first rate hike in nearly four years, The Hindu reported; Reuters also confirmed the increase.
The committee changed its monetary policy stance from “neutral” to “calibrated tightening.” RBI Governor Sanjay Malhotra said the inflation outlook could no longer be considered benign.
According to The Hindu, higher oil prices amid the continuing West Asia conflict are adding to inflationary pressure, squeezing purchasing power and weighing on currencies. Weak monsoon rains linked to El Niño have added to price pressures in India.