RBI Raises Repo Rate by 25 Basis Points to 5.50%: Key Facts for Exam Aspirants

The Reserve Bank of India raised the policy repo rate by 25 basis points (0.25 percentage points) to 5.50% on 7 October 2026. According to the available report, the Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, voted unanimously for the increase from 5.25%. It also changed the policy stance from neutral to calibrated tightening. As of 8 October 2026, this decision is a completed event. The rate change matters for exams because it reverses the recent direction of policy and ties together several standard Economy topics: the repo rate, the MPC, the stance, CPI inflation and growth projections.

RBI repo rate decision at a glance

Why the RBI raised the repo rate

The reported rationale is inflation pressure combined with external risks. The source names West Asia conflict-related risks, elevated crude oil prices and a weaker rupee. It also says retail inflation accelerated to 4.82% in August 2026, and that the RBI raised its FY27 CPI inflation forecast to 5.2% from 5.0%.

The report also says the RBI raised its FY27 real GDP growth projection to 7.1%. So the hike is described alongside a higher growth projection, not a weaker one. The supplied evidence does not give the MPC's detailed reasoning, quarterly projections or the individual members' statements.

Exam-relevant context

Repo rate and basis points

The repo rate is the rate at which the RBI lends short-term funds to commercial banks against government securities. One basis point is 0.01 percentage point, so 25 bps equals 0.25 percentage points. Moving from 5.25% to 5.50% is therefore a 25 bps increase. A hike generally signals tighter policy, and the source describes the repo rate as a key tool for liquidity management and inflation control.

The Monetary Policy Committee

The source states that the MPC has six members and fixes the policy repo rate under the Reserve Bank of India Act, 1934. The Governor chairs it. An RBI press release from June 2025 lists the Governor and five other members at that meeting. Membership can change over time, so avoid memorising names without checking a current source.

Policy stance: neutral to calibrated tightening

The stance is the RBI's broad signal about the direction of policy, separate from the rate itself. In June 2025, the RBI had moved its stance from accommodative to neutral, according to its press release. The October 2026 report says the stance has now moved from neutral to calibrated tightening. The source also says future action was stated to be limited to a hike or a pause, depending on economic conditions. This is a reported description, and the evidence does not include the exact official wording.

CPI inflation

The Consumer Price Index measures retail inflation in India. The June 2025 RBI release states the medium-term CPI inflation target as 4% within a band of +/- 2%. The reported August 2026 reading of 4.82% and the FY27 forecast of 5.2% both fall inside that band. The MPC's formal 4% target is a framework point and was not restated in the October 2026 report.

Avoid confusing this with the June 2025 decision

The repo rate was also 5.50% after the MPC's June 2025 decision. That was a different event: a 50 bps cut announced on 6 June 2025. In that release, the standing deposit facility (SDF) rate was set at 5.25% and the marginal standing facility (MSF) rate and Bank Rate at 5.75%. The supplied evidence does not give the SDF, MSF or Bank Rate for the October 2026 decision, so do not assume the same corridor applies.

The evidence also does not cover the steps between June 2025 and October 2026, including when the rate reached 5.25%. For a rate-history chart, use the RBI's own decision releases.

Evidence limits

• The details of the 7 October 2026 decision come from one secondary current-affairs report, published on 7 October 2026, the same day as the decision. The supplied RBI page is the June 2025 press release, not the October 2026 policy statement.
• No official October 2026 resolution, vote breakdown, MPC minutes or next meeting date is in the evidence.
• The effects on loan rates, deposit rates or the rupee are not covered, so this page makes no claims about them.

For official wording, check the RBI's press releases, including the June 2025 monetary policy resolution used here for background.

Quick revision points

• 7 October 2026: the repo rate rose by 25 bps to 5.50%, from 5.25%.
• The stance changed from neutral to calibrated tightening, and the vote was reported as unanimous.
• This was reported as the first hike since February 2023.
• Stated drivers: inflation pressures, West Asia-related risks, elevated crude oil prices and a weaker rupee.
• FY27 projections: GDP growth 7.1%, CPI inflation 5.2% (previously 5.0%).

These are factual points for revision. They do not predict that any particular question will appear in an exam.

FAQs

What is the new repo rate?

The reported repo rate is 5.50% following the 7 October 2026 decision.

How many basis points was the hike?

The hike was 25 basis points, or 0.25 percentage points, from 5.25% to 5.50%.

Was the decision unanimous?

According to the source report, yes, the MPC voted unanimously. No official vote breakdown is in the supplied evidence.

Is this the same as the 5.50% repo rate in 2025?

No. The June 2025 decision cut the rate by 50 bps to 5.50%. The October 2026 decision is a 25 bps increase to the same level.