RBI Raises Repo Rate to 5.5% Amid Inflation Pressures
By ThePip Desk
The RBI raised the repo rate by 25 bps to 5.5% on October 7, 2026, shifting to calibrated tightening to combat inflation. Read the full economic impact.
The Reserve Bank of India’s Monetary Policy Committee unanimously increased the repo rate by 25 basis points to 5.5% on October 7, 2026. This action represents the central bank’s first rate hike since February 2023.
Key Policy Adjustments and Rates
Alongside the benchmark repo rate adjustment, the central bank modified its associated lending and borrowing windows. The committee shifted its monetary policy stance from neutral to calibrated tightening by a majority vote of 4-2.
Here are the specific rate adjustments implemented during the announcement:
- Standing Deposit Facility rate adjusted to 5.25%.
- Marginal Standing Facility rate set at 5.75%.
- Bank rate established at 5.75%.
Economic Projections and Impact
The policy shift addresses persistent inflationary pressures that have been exacerbated by the ongoing conflict in West Asia. The central bank projects real GDP growth at 7.1% for FY27 while forecasting CPI inflation at 5.2% for the same period.
Commercial banks typically pass these benchmark changes on to borrowers, which affects floating-rate home loans. Borrowers may experience adjustments to their Equated Monthly Installments or loan tenures as a direct result of this new interest rate environment.