The Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5.5 per cent on Wednesday, October 7, marking its first increase since February 2023.
The Monetary Policy Committee voted unanimously for the hike and changed its policy stance from “neutral” to “calibrated tightening” as inflation concerns grew.
The repo rate had stood at 5.25 per cent. The latest decision comes amid pressure from rising crude oil prices and other supply disruptions.
Alongside the rate increase, the RBI raised its economic growth forecast for the 2026–27 financial year to 7.1 per cent from 6.7 per cent. It also increased its inflation projection to 5.2 per cent from 5 per cent.
The decision could make borrowing more expensive. Customers with loans linked to the repo rate may see their interest costs rise when their rates reset. The effect on monthly instalments or repayment periods will depend on the terms of each loan.
