Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday (October 7, 2026) announced that its members unanimously decided to increase the repo rate by 25 basis points, from 5.25% to 5.50%.
The key rate hike after nearly three-and-a half years comes as inflation pressures rise due to the continuing West Asia conflict.
India joined major central banks in raising rates as higher oil prices, triggered by the Iran war, fuel inflation, squeeze purchasing power, and weigh on currencies. Weak monsoon rains linked to El Niño have compounded price pressures on the economy.
The six-member MPC voted unanimously in favour of the rate hike. The monetary policy stance was changed to “calibrated tightening” from “neutral”.
It is clear that the outlook for inflation is no longer benign, Governor Sanjay Malhotra said in his policy address.
At the last MPC meeting in August, the MPC voted unanimously to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 5.25%, after a detailed assessment of the evolving macroeconomic and financial developments and the outlook.
Indian stock markets trimmed losses on Wednesday, October 7, after the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) unanimously raised the repo rate by 25 basis points to 5.5% from 5.25%, in line with expectations. This marks its first rate hike in four years amid price pressures.
