The Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50% on October 7, marking the first hike since February 2023. The Monetary Policy Committee (MPC) voted unanimously for the increase and shifted the policy stance to "calibrated tightening," signaling that rate cuts are unlikely in the near term, according to livemint.com.
The three-day MPC meeting concluded with a 4-2 majority vote to raise rates amid rising inflationary pressures and elevated crude oil prices driven by the ongoing Middle East conflict. RBI Governor Sanjay Malhotra highlighted global inflation risks and the need to reinforce inflation credibility. The central bank also raised its GDP growth forecast for the financial year 2026-27 to 7.1%, reflecting resilience despite external challenges, per livemint.com.
This rate hike comes after four consecutive policy reviews maintaining the repo rate at 5.25%, following a cumulative 125 basis point reduction in 2025. The decision aligns with global central banks' tightening trends amid inflation risks. The RBI's move aims to balance growth and inflation concerns, especially given India's dependence on energy imports and potential food inflation risks from adverse weather conditions, as detailed by livemint.com.
Governor Malhotra delivered the Monetary Policy Statement at 10:00 AM on October 7, followed by a press conference at noon to discuss the economic outlook and policy implications, according to livemint.com.