Author: Nishtha Mehrotra | EQMint
The Reserve Bank of India has raised the benchmark repo rate by 25 basis points to 5.50%, marking its first rate hike since February 2023. RBI Governor Sanjay Malhotra announced the decision on 7 October 2026 following the Monetary Policy Committee (MPC) meeting.
The RBI repo rate hike 5.50% decision takes the policy rate from 5.25% to 5.50%. According to reports, the six-member MPC voted unanimously for the increase and shifted its policy stance from neutral to “calibrated tightening.”
The RBI’s move comes amid concerns over inflation, higher energy prices and global monetary tightening. Strong domestic economic activity was also a factor behind the decision.
The central bank had kept the repo rate unchanged at 5.25% for four consecutive meetings after cutting rates by a cumulative 125 basis points in 2025. Its previous rate hike was in February 2023, when the repo rate was increased by 25 basis points to 6.50%.
The decision is expected to put pressure on rate-sensitive sectors such as automobiles and real estate, while banks could benefit from higher interest rates. For borrowers, loans linked to external benchmarks may become more expensive, while deposit rates could see upward movement.
Some analysts expect another rate hike later in FY27, although the RBI has not provided a fixed path for future policy action.
Disclaimer: This article is for information purposes only and is not investment advice.
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