India’s Reserve Bank of India (RBI) raised its policy repo rate by 25 basis points to 5.50% on Wednesday, marking its first increase since February 2023. The decision could make borrowing more expensive.
RBI Governor Sanjay Malhotra announced the move after the Monetary Policy Committee (MPC) reviewed the policy rate and economic conditions.
Why the RBI raised the rate
The MPC cited rising inflation risks, the global economic situation and strong domestic growth as factors behind the increase. The decision signals a gradual shift away from the RBI’s long-standing accommodative stance.
What the rate increase means
The repo rate is the rate at which the RBI lends to banks. The 25-basis-point increase raises the possibility of costlier borrowing, although the supplied information does not specify how individual lenders or loan products will be affected.
