Archive · 8 Oct 2026
RBI Raises Repo Rate to 5.50% as Inflation Pressures Broaden
India’s central bank raised the rate it charges banks to borrow money.
The rate rose by 0.25 percentage points, reaching 5.50%.
The bank said prices are rising across more kinds of food and other goods, while oil prices are also uncertain.
It raised its forecast for inflation this financial year.
It also changed its policy stance, saying rate cuts are unlikely soon.
Its next move could be another increase or a pause, depending on what happens to prices and the economy.
Higher rates can make some loans and repayments more expensive.
Economists disagree about how many more increases may be needed.
The RBI also raised its forecast for economic growth.
On October 7, the RBI raised its repo rate by 25 basis points to 5.50%; the MPC’s rate decision was unanimous.
The MPC shifted its stance from neutral to calibrated tightening; one report says that stance decision was backed by a 4-2 majority.
The RBI raised its FY27 retail inflation forecast to 5.2%, projecting inflation at 6.0% in Q3 and 5.7% in Q4.
The central bank cited wider food-price pressures, oil-price volatility, a deficient monsoon and El Niño risks.
Economists differed on what comes next: forecasts ranged from a shallow cycle to further increases, with some expecting a December hike.
- Who
- The Reserve Bank of India’s Monetary Policy Committee, announced by Governor Sanjay Malhotra.
- What
- Raised the repo rate by 25 basis points to 5.50% and shifted its stance from neutral to calibrated tightening.
- When
- October 7, 2026; the MPC met from October 5 to 7.
- Where
- India.
- Why
- The RBI cited broadening inflation pressures, including food and oil prices, and risks to the inflation outlook.
Caution about further tightening
Case for more rate hikes
Economic costs of higher rates
Caution about further tightening
Economist Mitali Nikore warned that higher rates could weigh on credit, consumption and investment when growth needs to remain resilient. ICRA also cited risks to growth from weak monsoon conditions and elevated oil prices.
Case for more rate hikes
The RBI said inflation pressures were broadening and the outlook was not benign. SBI Research argued that persistent inflation could justify a higher peak rate.
How far rates may rise
Caution about further tightening
HSBC’s Pranjul Bhandari expected a relatively shallow, 50-basis-point hiking cycle. ICRA expected only one further 25-basis-point increase unless inflation worsened substantially.
Case for more rate hikes
SBI Research said the repo rate could reach 6%. Other economists anticipated further increases, including possible December hikes; their estimates varied, with some expecting a cumulative 50–75 basis points or more.
- Repo rate
- Raised by 25 basis points to 5.50%
- Rate decision
- Unanimous vote by the MPC
- Policy stance
- Changed from neutral to calibrated tightening; one report says the stance decision was supported 4-2
- FY27 retail inflation forecast
- Raised from 5.0% to 5.2%
- FY27 quarterly inflation projections
- 4.9% in Q2, 6.0% in Q3 and 5.7% in Q4
- FY27 GDP growth forecast
- Raised from 6.7% to 7.1%
- Near-term policy outlook
- The RBI said the next action could be a hike or a pause; rate cuts are off the table in the near term
- Borrowing costs
- Home, vehicle and corporate loans, as well as some existing borrowers’ repayments, may become more expensive
Sources
RBI raises repo rate after nearly 4 years: Are more hikes coming? Here’s what economists say
RBI raises repo rate to 5.5%, signals start of rate hike cycle
RBI Hikes Repo Rate By 25 Bps To 5.50%, Changes Stance To Calibrated Tightening; EMIs To Get Costlier
RBI Hikes Repo Rate to 5.5%, Raises FY27 Retail Inflation Forecast to 5.2%
Reserve Bank hikes repo rate by 25 basis points to 5.5%, shifts stance to 'calibrated tightening'
RBI Raises Repo Rate By 25 BPS To 5.50%, Shifts Stance To Calibrated Tightening
RBI hikes repo rate by 25 basis points to 5.5 pc; changes stance to ‘calibrated tightening’
RBI Hikes Rate as Sanjay Malhotra Warns Inflation Is Spreading
RBI Governor dismisses further rate cuts in near term, changes stance to 'Calibrated Tightening'
