The Reserve Bank of India lifted the repo rate by 25 basis points to 5.50 percent and moved its stance to calibrated tightening. The panel voted unanimously.
The Reserve Bank of India raised its policy repo rate by 25 basis points to 5.50 percent on Wednesday, the first increase in nearly four years, Reuters reported from Mumbai. The six-member Monetary Policy Committee voted unanimously. The standing deposit facility rate moved to 5.25 percent, and the marginal standing facility rate and the bank rate to 5.75 percent.
The bank also changed its stance from neutral to calibrated tightening. Governor Sanjay Malhotra said that, under current conditions, rate cuts were off the table in the near term and that the next move could only be a further rise or a pause. He said the length of any hiking cycle would depend on growth, underlying inflation, how widely price pressures spread, and second-round effects of a supply shock.
Reuters said the bank lifted its inflation forecast for the current financial year to 5.2 percent from 5 percent and its growth forecast to 7.1 percent from 6.7 percent. Malhotra said the economy had been strong and momentum broad-based, but that the inflation outlook had worsened since the last meeting and was no longer as benign as last year. The Hindu said the repo rate had been cut to 5.25 percent in December 2025 and held at the next four meetings.
Nearly 60 percent of economists in a Reuters poll had expected a 25 basis point rise. The decision puts India with other central banks that have been tightening as oil and bond yields moved higher elsewhere on Wednesday.
The statement is the policy decision. Malhotra did not set a date or size for any further increase.
People Sentiments Mixed
- Sanjay Malhotra said rate cuts were off the table in the near term.
- He said inflation and its outlook were not as benign as last year.
- He said the economy had been strong and momentum remained broad-based.