Almost 44 months later, the country’s central bank, the Reserve Bank of India, appeared to be intensifying its fight against inflation. This is the reason why the RBI MPC has hiked the repo rate for the first time since February 2023. The RBI Governor has announced an increase in the repo rate by 25 basis points. After this decision, the EMI of retail loans other than home loans and car loans will become expensive in the country. This decision has been taken by RBI keeping in mind the ever increasing inflationary pressure.

Earlier, RBI did not change the repo rate for four consecutive times. While in the year 2025, the repo rate was reduced by 125 points from February to December. In the current year, the outbreak of war in the Middle East has increased crude oil prices and increased inflation. The rise in crude oil prices was not the only reason for the Middle East. Its effect was seen on other things as well.

#View | RBI hiked policy repo rate by 25 basis points to 5.5%

— ANI (@ANI) October 7, 2026

There was also a crisis in the supply of natural gas, fertilizer and other essential commodities. Due to which problems have arisen not only in India but all over the world. On the other hand, due to El Niño, the monsoon has been much less than expected, which has also affected agriculture. This had an impact on production, which may continue in the future as well. The RBI Governor has hinted that if the situation continues, the December meeting may also see an increase in the repo rate.

Increase in repo rate

According to RBI Governor Sanjay Malhotra’s statement, the MPC has announced an increase in interest rates. This increase of 25 basis points has been observed. After which the repo rate of RBI will increase from 5.25 percent to 5.50 percent. However, there has been no change in interest rates in the last 4 RBI MPCs of the current year. Earlier, RBI had cut the repo rate by 125 basis points between February 2025 and December 2025. After which RBI pressed the pause button. However, after RBI’s last policy meet, the RBI governor was warning about the Middle East war and the impact of El Nino. There were also signs of rising inflation. The US Federal Reserve also raised interest rates last month.