After nearly three-and-a-half years, the Reserve Bank of India (RBI) today raised the key benchmark policy rate by 25 basis points to 5.5 per cent in a bid to contain rising inflation amid continuing global and geopolitical uncertainties.
The last repo rate hike was in February 2023, when the RBI raised the rate by 0.25 per cent to 6.50 per cent. It kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025.
Announcing the bi-monthly monetary policy, RBI Governor Sanjay Malhotra said the Monetary Policy Committee unanimously decided to raise the policy repo rate by 25 basis points.
The RBI has projected real GDP growth for the current financial year at 7.1 per cent, with growth projected at 7.2 per cent in the second quarter, 6.9 per cent in the third quarter and 6.8 per cent in the fourth quarter.
The RBI has raised its inflation projection for the financial year to 5.2 per cent from 5.1 per cent earlier. Inflation is projected at 4.9 per cent in the second quarter, 6 per cent in the third quarter and 5.7 per cent in the fourth quarter. Meanwhile, retail inflation rose to 4.82 per cent in August, compared to 4.45 per cent in the previous month.
The MPC also changed its stance to ‘calibrated tightening’ from ‘neutral’. While the decision to raise the repo rate was unanimous, the change in stance was supported by four members, with two members favouring continuation of the neutral stance.
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