Reserve Bank of India raises repo rate for first time in nearly four years

The Reserve Bank of India (RBI) has raised its policy repo rate for the first time in nearly four years. The Monetary Policy Committee on Wednesday raised the repo rate by 25 basis points to 5.50 percent.

The rate had previously been raised to 6.50 percent in February 2023, while it was kept unchanged at 5.25 percent last August. Governor Sanjay Malhotra said the six-member committee took the decision unanimously. This is the first rate hike during Malhotra's tenure, which began in December 2024.

The committee also shifted its policy stance by majority from 'neutral' to 'calibrated tightening', meaning gradual tightening. India's consumer price index-based inflation reached 4.82 percent in August. Rising crude oil prices and a weak monsoon were cited as adding to inflation risks.

The standing deposit facility rate stands at 5.25 percent and the bank rate at 5.75 percent.