Banking News – Amid rising inflation risks, the global economic situation, and strong domestic economic growth, the Reserve Bank of India (RBI) raised the policy repo rate by 25 basis points to 5.50 percent on Wednesday. RBI Governor Sanjay Malhotra stated that the Monetary Policy Committee (MPC) unanimously decided to increase the repo rate after assessing the broad economic and financial situation and the future outlook. In August, the committee had kept the repo rate unchanged at 5.25 percent, adopting a neutral policy stance.

Following the repo rate hike, the Standing Deposit Facility rate stands at 5.25 percent, while the Marginal Standing Facility and Bank Rate stand at 5.75 percent. The MPC’s policy stance has been changed by majority toward further tightening monetary policy. India’s Consumer Price Index-based inflation had reached 4.82 percent in August. It is estimated that weak monsoon and the risk of crude oil prices reaching 100 USD per barrel could put additional pressure on price increases in the days ahead.

Meanwhile, India’s economy expanded by 7.8 percent in the first quarter of fiscal year 2026/27. Economic activity in domestic demand, manufacturing, and the service sector has been reported to be strong. Economists estimate that based on inflation, oil prices, and the global financial situation, the repo rate could reach around six percent by the end of fiscal year 2026/27.