Financial News: India Raises Interest Rates By 25 Bps; Shifts

India Raises Interest Rates By 25 Bps; Shifts Stance To Calibrated Tightening

10/07/2026 - 01:22:00 (RTTNews)

(RTTNews) - The Reserve Bank of India raised its benchmark interest rates by 25 basis points and changed its monetary policy stance to calibrated tightening.

The Monetary Policy Committee, governed by Sanjay Malhotra, unanimously decided to hike the policy repo rate to 5.50 percent from 5.25 percent. This was the first hike in nearly four years.

The MPC also decided to change the stance to "calibrated tightening" from "neutral".

"It only signals that given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook," the bank said in a statement.

The governor said that there is some evidence of elevated inflation expectations and generalization of inflation but there are limited signs of supply side pressures getting embedded in pricing behavior.

CPI inflation for 2026-27 was estimated at 5.2 percent, up from the previous forecast of 5.0 percent. Core inflation was projected at 4.4 percent.

Despite geopolitical challenges, India's economy is expected to remain resilient, the governor said. The bank raised its real GDP growth outlook for 2026-27 to 7.1 percent from 6.7 percent.

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