The Reserve Bank of India raised its benchmark repo rate by 25 basis points to 5. 50 percent on 7 October, ending a long pause at 5. 25 percent. Governor Sanjay Malhotra announced the outcome of the three-day Monetary Policy Committee meeting at 10 am.
It is the first increase in borrowing costs since February 2023. The committee also changed its policy stance from neutral to calibrated tightening, signalling that further moves are possible if price pressures persist. Reports on the decision say the vote in favour of the hike was unanimous. The central bank had cut rates by a cumulative 125 basis points during 2025 before holding steady through four consecutive reviews.
The change of direction reflects concern that food and fuel-driven inflation, aggravated by elevated oil prices during the Iran war, could spread into wider price pressures. Economists had broadly expected this outcome, with one rating-agency chief economist saying a 25 basis point hike and a stance change were what his team had projected. Borrowers with repo-linked loans can expect higher EMIs once banks pass on the increase, while fixed-deposit savers may see better returns. The balance between supporting growth and containing inflation will be closely watched at coming policy meetings.