New Delhi: Ahead of Festive season, RBI hikes Repo Rate. Yes you’ve heard it right. In the face of global uncertainties and a surge in crude oil prices, the Reserve Bank of India (RBI) has implemented a significant measure to manage the country’s economy and inflation.
RBI Hikes Repo Rate
Led by RBI Governor Sanjay Malhotra, the Monetary Policy Committee (MPC) has decided to raise the repo rate by 25 basis points (0.25%) during its October policy review, bringing the policy rate up from 5.25% to 5.50%. This move will result in increased borrowing costs for banks, directly impacting the public as interest rates on home loans, car loans, and personal loans are expected to rise, potentially making monthly installments more expensive.
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Governor Sanjay Malhotra explained that following a thorough assessment of the current economic and financial conditions, the MPC unanimously opted to raise the repo rate by 25 basis points, setting it at 5.50%. Alongside the repo rate adjustment, the Standing Deposit Facility (SDF) rate has been revised to 5.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been elevated to 5.75%.
Sanjay Malhotra Made Big Comment
Despite global challenges stemming from geopolitical developments, Governor Sanjay Malhotra highlighted that the Indian economy continues to exhibit resilience and witness a broad-based strengthening of economic activities. The central bank is confident in the economy’s ability to uphold its robust performance moving forward.
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This marks the first instance of the Reserve Bank increasing interest rates since February 2023. Previously, the RBI had reduced interest rates by a total of 125 basis points throughout 2025 to combat inflation. However, recent geopolitical tensions and the spike in crude oil prices have compelled the central bank to make this tough decision to tackle inflation.
The RBI’s Monetary Policy Committee (MPC) may have also factored in recent moves by central banks in developed nations. Notably, interest rate hikes by the US Federal Reserve and the European Central Bank (ECB) could have influenced the RBI’s decision-making process.
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Last month, the US Fed raised its key interest rate by 25 basis points to manage inflation, which has been mounting due to various factors, including escalating oil prices. Similarly, the European Central Bank also raised its key interest rate by 25 basis points in a bid to address inflation.