RBI raises repo rate by 25bps to 5.5%

October 07, 2026 (MLN): The Reserve Bank of India (RBI) has raised its benchmark repo rate, the rate at which it lends to commercial banks, by 25 basis points to 5.50%.

The six-member Monetary Policy Committee backed the hike unanimously, bringing the central bank in line with several global peers that have tightened policy to contain inflation or support their currencies.

The Indian central bank had held rates steady for months while it gauged how volatile crude prices would affect the world's fastest-growing major economy, it is the first hike in more than three years.

Strong GDP growth in the latest quarter gave it room to shift its attention to prices. India imports most of its energy, and a weak monsoon has raised the risk of a jump in food prices.

Retail inflation climbed to 4.82% in August, the third consecutive month above the RBI's medium-term target of 4%. Data also showed price pressures spreading beyond food and transport.

The Indian rupee added to the pressure, trading near record lows over the past week.

 The RBI introduced a series of measures to attract dollar inflows, including a deposit scheme for non-resident Indians that drew about $127bn.

The measures halted the currency's slide, but it has come under fresh strain as foreign investors keep selling Indian equities and crude oil trades near $100 per barrel.

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