RBI Raises Repo Rate 25 Basis Points to 5.50%, First Hike Since February 2023, as Inflation Pressures Build

The Reserve Bank of India's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50 percent on October 7, 2026, the first hike since February 2023, and shifted its stance from neutral to calibrated tightening, RBI Governor Sanjay Malhotra announced. The decision was unanimous across the six-member MPC, which met October 5-7. The repo rate had been cut by a cumulative 125 basis points during 2025, from 6.50 percent to 5.25 percent, where it remained at four consecutive meetings before the October 7 increase, according to Forbes India and CNBC. The standing deposit facility rate was raised from 5.00 percent to 5.25 percent, and the marginal standing facility and bank rate were raised from 5.50 percent to 5.75 percent. Malhotra said inflation and its outlook are not benign, with global oil prices above $100 per barrel and a weaker rupee adding to inflation risks. The RBI raised its FY27 real GDP growth projection by 40 basis points to 7.1 percent and lifted its inflation forecast to 5.2 percent. Future policy action can only be a rate hike or a pause, depending on how growth and inflation evolve, Malhotra said, ruling out near-term cuts.

The hike affects borrowing costs across banking, real estate and automobile sectors. Malhotra said future action depends on how growth and inflation evolve, with near-term cuts ruled out and policy options limited to further hikes or pauses.

Sources

Forbes India, "RBI MPC Meeting Oct 7 2026 Live: Rate cuts off the table as RBI raises repo rate to 5.5%," October 7, 2026, forbesindia.com CNBC, "India's central bank hikes rates for the first time since 2023 as inflation risks build," October 7, 2026, cnbc.com IAS Point, "RBI Monetary Policy and Inflation Challenges," October 7, 2026, iaspoint.com WhalesBook, "RBI Policy Meet: Markets Signal Rate Hike Risk Ahead of Oct 7 Outcome," October 6, 2026, whalesbook.com WION, "LIVE Updates | Latest India and World News October 7, 2026," October 7, 2026, wionews.com