The RBI lifted its policy rate by 25 basis points to 5.5% on October 7, after economists had anticipated a possible move to address inflation pressures.
The Reserve Bank of India (RBI) raised its policy repo rate by 25 basis points to 5.5% on October 7, its first increase since February 2023. The decision followed a three-day meeting of the Monetary Policy Committee chaired by Governor Sanjay Malhotra.
Before the announcement, economists were divided: most expected an increase, while some thought the central bank might hold rates. The Hindu’s earlier report described those pre-decision forecasts rather than the outcome.
The repo rate had stood at 5.25%. In February 2023, the RBI raised it by 25 basis points to 6.5%. It then kept the rate unchanged through the 2023–24 financial year before beginning a reduction cycle in 2025, with cuts totalling 125 basis points.
Moneycontrol reported that the committee was weighing inflation, higher oil prices and pressure on the rupee. The increase reverses the previous easing cycle. Its effects on borrowing costs and savings will depend on subsequent RBI decisions and how banks adjust their rates.