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India’s central bank has raised its key interest rate for the first time since 2023 as inflation risks increase despite strong economic growth.
Mariyam Adheela
Close view of Reserve Bank of India, RBI signage, logo at its entrance gate -- Photo: Vijay Sartape/NDTV Profit
MUMBAI: The Reserve Bank of India has raised its benchmark repo rate by 25 basis points to 5.5 per cent.
The increase was approved unanimously by the Monetary Policy Committee on Wednesday. It is the first rate hike since February 2023.
The RBI also changed its policy stance from neutral to “calibrated tightening”, signalling a stronger focus on controlling inflation.
The central bank raised its economic growth forecast for the 2026-27 financial year to 7.1 per cent from 6.7 per cent.
However, it also increased its inflation forecast to 5.2 per cent from five per cent.
The RBI said rising food and energy prices, higher global oil prices and wider global economic risks are putting pressure on inflation.
The rate increase could lead to higher borrowing costs for loans linked to the repo rate, including some home and vehicle loans.
