RBI hikes repo rate by 25 bps to 5.5%, first increase since February 2023

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday announced a 25-basis-point increase in the repo rate to 5.5 per cent, marking the first hike in nearly four years amid rising inflation and strong economic growth.

The Monetary Policy Committee (MPC) unanimously approved the increase in the policy interest rate, Malhotra said.

An increase in the repo rate raises the borrowing cost for banks, which can subsequently result in higher interest rates and equated monthly instalments (EMIs) for borrowers.

The RBI last raised the repo rate in February 2023, increasing it by 25 basis points to 6.5 per cent. The central bank kept the rate unchanged throughout 2023-24 before beginning its rate-cut cycle in 2025.