Mumbai The Reserve Bank of India (RBI) on Wednesday increased the key policy interest rate repo rate by 0.25 per cent to 5.50 per cent after nearly three and a half years, as global uncertainty increased. Along with this, RBI has increased the economic growth rate estimate for the current financial year by 0.40 percent to 7.1 percent.
RBI Governor Sanjay Malhotra on Wednesday informed about the decisions taken in the three-day bi-monthly review meeting of the Monetary Policy Committee (MPC) starting from Monday. He said that considering the current global circumstances, the MPC unanimously decided to increase the repo rate by 0.25 percent to 5.50 percent. With this, the MPC decided to change its stance from ‘neutral’ to ‘strict as necessary’.
Malhotra said that also the estimate of economic growth rate for the current financial year 2026-27 has been increased to 7.1 percent, which was earlier 6.7 percent. At the same time, the inflation estimate has been increased from five to 5.1 percent. He also indicated that further cuts in policy rates were unlikely. It will either increase or remain stable.
Repo rate: This is the interest rate at which commercial banks take loans from the central bank to meet their immediate needs. By increasing the repo rate of RBI, the monthly installment of housing, vehicle and commercial loans may increase.
It is noteworthy that this is the first time after February 2023 that the policy interest rate has been increased. Earlier last year, from February to December 2025, the repo rate was reduced by a total of 1.25 percent. There was no change in the policy rate in the bi-monthly monetary policy review meetings of February, April, June and August this year.