Pull to refresh
Logo
What Changed
Following Why Sign Up
RBI hikes repo rate for first time since 2023

RBI hikes repo rate for first time since 2023

Money Moves

Minutes show the panel open to more hikes but wary of an aggressive cycle as inflation runs at 5.54%

October 21st, 2026: MPC minutes show appetite for further hikes

Overview

Updated Oct 22

India's central bank raised its benchmark lending rate by a quarter point to 5.5% on October 7, the first increase in nearly four years. September inflation came in at 5.54%, above the RBI's 5.2% forecast for the fiscal year.

Minutes released on October 21 showed all six members backed the hike, but two opposed the shift to a "calibrated tightening" stance. Ram Singh, one of those two, wrote that the case is for "incremental, mild" increases rather than "high-for-long rates". Barclays, Goldman Sachs and HSBC all expect another increase when the committee meets on December 2-4.

Why it matters

Borrowers pay more on home and auto loans as banks pass on the hike, with another increase expected in December.

Questions about this story

Free account needed to ask — your question is kept and asked for you right after sign-up. Answers are public.

No questions yet — be the first to ask.

Key Indicators

5.5%
Repo rate
RBI's benchmark lending rate after the October 2026 hike
5.54%
September CPI inflation
Consumer price inflation in September 2026, up from 4.8% in August
6.0%
Inflation forecast, Oct-Dec quarter
RBI's projected CPI inflation for the December 2026 quarter
5.2%
CPI inflation forecast 2026-27
RBI's projected headline inflation for the current fiscal year
7.1%
GDP growth forecast 2026-27
RBI's projected real GDP growth for the current fiscal year
21
Meetings without a rate hike
Consecutive MPC meetings that held rates before the October 2026 hike

Voices

Curated perspectives — historical figures and your fellow readers.

Sign up to generate historical perspectives on this story.

Log in Sign Up

People Involved

Sanjay Malhotra
Sanjay Malhotra
Governor, Reserve Bank of India
Chaired the MPC meeting that hiked rates
 Nagesh Kumar
Nagesh Kumar
MPC member
Voted for the hike but wanted the stance kept at neutral, minutes confirm
RS
Ram Singh
MPC member
Voted for the hike but opposed the stance shift, warning against a long hiking cycle
SG
Sakshi Gupta
Economist, HDFC Bank
Expects 50-75 bps more in hikes; says the RBI is back to fine-tuning liquidity
 Krishna Bhimavarapu
Krishna Bhimavarapu
Asia Pacific economist, State Street Investment Management
Expects 100 bps of cumulative tightening
TJ
Tanvee Gupta Jain
Chief India Economist, UBS
Expects 25-50 bps more in hikes
PG
Poonam Gupta
Deputy Governor, Reserve Bank of India
Argued against waiting for clearer evidence of broadening inflation

Organizations Involved

Reserve Bank of India
Reserve Bank of India
Central bank
Raised repo rate to 5.5%

India's central bank, responsible for monetary policy and financial stability.
Monetary Policy Committee (MPC)
Monetary Policy Committee (MPC)
Rate-setting committee
Released minutes on October 21 showing support for further hikes, with caution on pace

Six-member committee that sets India's policy interest rate.

Timeline

February 2023 October 2026

6 events Latest: October 21st, 2026 · 3 weeks ago
Tap a bar to jump to that date

  1. MPC minutes show appetite for further hikes

    Latest Policy

    The minutes showed all six members voted for the 25 basis point hike, with Nagesh Kumar and Ram Singh opposing the shift to calibrated tightening. Members said more increases may be needed but warned against an aggressive cycle.

  2. RBI injects 1 trillion rupees as call rates spike

    Markets

    The RBI's first liquidity infusion in more than three months drew bids above 1.5 trillion rupees. The interbank call money rate had ended above the marginal standing facility rate for the first time this fiscal year.

  3. September inflation climbs to 5.54%

    Data

    Consumer price inflation rose to 5.54% in September from 4.8% in August, above the RBI's 5.2% forecast for the year.

  4. RBI hikes repo rate to 5.5%

    Policy

    The MPC voted unanimously to raise the repo rate by 25 basis points to 5.5% and shifted its stance to calibrated tightening.

  5. MPC holds rates at August meeting

    Policy

    The MPC kept the repo rate at 5.25% in its August 2026 meeting.

  6. RBI delivers last rate hike before pause

    Policy

    RBI raised the repo rate in February 2023, the last increase before a pause lasting more than three years.

Scenarios

1

RBI hikes another 50-75 bps by mid-2027

Likely Resolves by Q2 2027

Discussed by: HDFC Bank economist Sakshi Gupta

If inflation stays elevated and oil prices remain high, the RBI could deliver another 50-75 basis points of hikes over the coming months. HDFC Bank's Sakshi Gupta expects this pace of tightening, with the West Asia conflict keeping crude prices elevated.

2

RBI pauses after single hike

Possible Resolves by Q2 2027

Discussed by: Economists who predicted a shallow cycle

If inflation moderates faster than expected and oil prices ease, the RBI could hold rates at 5.5% for the rest of the cycle. Some economists predicted only a shallow 50 bps cycle before the decision, and the RBI's own guidance leaves room for a pause depending on data.

3

RBI delivers 100+ bps cumulative tightening

Possible Resolves by End of 2027

Discussed by: State Street Investment Management

If the West Asia conflict keeps oil prices elevated and inflation risks grow, the RBI could deliver 100 basis points or more of cumulative tightening. State Street's Krishna Bhimavarapu expects this outcome, and financial markets had already priced in a long-ish hiking cycle of at least 100 bps before the decision.

4

RBI delivers one more hike in December, then pauses

Possible Resolves by Dec 4, 2026

Discussed by: ICRA

ICRA expects a single 25 bps hike in December 2026, taking the repo rate to 5.75%, followed by a pause. Its baseline puts CPI inflation at 5.0% for FY2027, below the RBI's own 5.2% forecast. Elevated crude prices could push inflation to 5.3-5.5% and GDP growth to 6.8%.

5

RBI delivers a 50 basis point hike in December

Possible Resolves by Dec 4, 2026

Discussed by: HSBC

HSBC expects an outsized 50 basis point increase at the December meeting, taking the repo rate to 6%, rather than the quarter-point steps the RBI has used so far. That would require the committee to judge that price pressures have broadened beyond food and fuel.

6

Tightening runs into mid-2027

Possible Resolves by Q2 2027

Discussed by: Goldman Sachs and Barclays

Goldman Sachs expects at least three more hikes spread between December 2026 and June 2027, and Barclays expects two. That path would put the repo rate near 6.25% or higher and depend on inflation staying close to the RBI's 6% ceiling.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

May 2022 - February 2023

RBI's 2022-2023 tightening cycle (May 2022 - February 2023)

The RBI raised the repo rate by 250 basis points from 4% to 6.5% over 10 months to combat post-pandemic inflation that peaked above 7%.

Then

Inflation moderated toward the 4% target as the hikes took effect.

Now

The cycle established the rate level that preceded the current pause.

Why this matters now

This was the last tightening cycle before the October 2026 hike.

June - August 2018

RBI's 2018 rate hikes (June-August 2018)

The RBI raised the repo rate twice by 25 basis points each, from 6% to 6.5%, under Governor Urjit Patel, citing inflation risks from rising oil prices.

Then

The hikes were followed by a pause as growth concerns emerged.

Now

Showed how the RBI balances inflation control against growth.

Why this matters now

A similar shallow cycle could play out now if inflation moderates.

Sources

(19)
+13
Reserve Bank of India BBC Indian Express The Hindu Wall Street Journal Business Standard Reuters via My 95.7 Moneycontrol Investing.com Business Today ET CFO The Economic Times Reserve Bank of India Indian Express Moneycontrol Indian Express Reserve Bank of India Reuters via Investing.com Moneycontrol