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RBI Unanimously Hikes Repo Rate to 5.50%

By Drooid · Oct 7, 2026, 7:56 AM UTC · How we work

Summary

RBI Hikes Repo

The RBI’s Monetary Policy Committee unanimously raised the repo rate 25 basis points, its first hike in nearly three-and-a-half years.
Banks are expected to lift fixed-deposit interest rates shortly after the repo hike.
Higher oil prices from the Iran war have added inflationary pressure, prompting the rate increase.
Weak monsoon rains linked to El Niño have intensified food and agricultural commodity price pressures.

Summary

RBI Raises Rates

RBI raised the repo rate by 25 basis points to 5.50% on Wednesday.
The Monetary Policy Committee voted unanimously to shift policy stance from neutral to calibrated tightening.
Equity indices fell after the hike, with Nifty Auto down over 1%.
Retail inflation rose to 4.82% in August, above the RBI’s 4% target.
Foreign institutional investors sold equities for a seventh week, adding to market weakness.

History

Historical Context

In June 2008 the RBI’s Monetary Policy Committee raised the repo rate by 25 bp to 8.00 % as Brent crude topped $147, pushing inflation to 6.5 %. The 2016 amendment that created the MPC formalised such decisions, setting a 4 % inflation target with a 2-6 % tolerance. Today, facing high oil prices and monsoon deficits, the RBI again lifted the repo to 5.50 %.

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RBI Hikes Repo

The RBI’s Monetary Policy Committee unanimously raised the repo rate 25 basis points, its first hike in nearly three-and-a-half years.
Banks are expected to lift fixed-deposit interest rates shortly after the repo hike.
Higher oil prices from the Iran war have added inflationary pressure, prompting the rate increase.
Weak monsoon rains linked to El Niño have intensified food and agricultural commodity price pressures.

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