RBI raises repo rate to 5.50% in unanimous vote

The Reserve Bank of India’s Monetary Policy Committee raised its benchmark repo rate by 25 basis points to 5.50% on October 7, ending an August pause and shifting its policy stance from neutral to calibrated tightening. The six-member committee voted unanimously for the rate increase, while a majority backed the stance change, according to the policy announcement by Governor Sanjay Malhotra. The repo rate had remained at 5.25% after the committee held it steady in August. The RBI also set the standing deposit facility rate at 5.25% and the marginal standing facility rate and bank rate at 5.75%, the governor said. The decision came as inflation risks drew renewed attention. Consumer inflation was 4.82% year over year in August, above the RBI’s 4% medium-term target for a third consecutive month, according to reported inflation data. Reports also cited higher oil prices and currency weakness as risks that could add to the cost of imports. The policy accounts did not establish how much each factor influenced the committee’s decision. Malhotra said the economy remained strong, with broad-based momentum, and was expected to remain resilient. One report put GDP growth at 7.