Reserve Bank of India raises repo rate by 25 basis points to 5.50%, first hike since 2023

The Reserve Bank of India increased its benchmark repo rate by 25 basis points to 5.50% on Wednesday, marking the first rate hike since February 2023. The decision was made by the monetary policy committee to shift to a 'calibrated tightening' stance amid rising inflation, which reached 4.8% in August, above the RBI's 4% medium-term target.

Why it matters. The rate hike signals a shift in India's monetary policy as inflation pressures mount, affecting borrowing costs for businesses and consumers and influencing capital flows in emerging markets.