The Repo rate was last raised in February 2023, when it was increased by 25 basis points to 6.50
RBI raises Repo rate by 25bps to 5.50%: The Reserve Bank of India (RBI), on Wednesday, 7 October, raised the repo rate by 25 basis points to 5.50%. The development comes amid rising inflationary pressures, rising crude oil prices and challenging global environment.
The decision was taken by the Monetary Policy Committee (MPC), led by RBI Governor Sanjay Malhotra, to control inflation and maintain economic stability. The 6 member rate panel voted unanimously in favour of the rate hike. The Repo rate was last raised in February 2023, when it was increased by 25 basis points to 6.50.
The move marks the first rate hike under Governor Sanjay Malhotra, who took office in December 2024 and oversaw a series of rate cuts last year. It also puts the RBI in line with several Asian peers like Bank of Japan and Bank of Korea that have started tightening policy in response to renewed inflation pressures.
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Following the hike, the Standing Deposit Facility (SDF) rate stands at 5.25%, while the Marginal Standing Facility (MSF) rate and Bank Rate have increased to 5.75%. The repo rate hike could make borrowing more expensive for banks, which may lead to higher interest rates on home, car, and personal loans and increase EMIs.
Despite global challenges and geopolitical tensions, Governor Sanjay Malhotra said that the Indian economy remains resilient, with strong growth across various sectors.
