Why RBI hiked repo rate by 25 basis points to 5.5% in the MPC review
The Reserve Bank of India has increased the repo rate by 25 basis points to 5.5% to combat persistent inflation. Despite global economic volatility, the central bank remains optimistic about India's robust growth trajectory.
Why it matters
Interest rate hikes directly impact consumer borrowing costs, EMIs, and the broader economic growth environment in India.
RBI governor Sanjay Malhotra announced the Monetary Policy Committee’s (MPC) decision to hike repo rate by 25 basis points on Wednesday. Repo rate is the rate at which RBI lends money to banks and it now stands at 5.50%. The rate hike by RBI follows a similar increase by the US Federal Reserve last month as global inflationary pressures prompt central banks to tighten liquidity.“The sudden reescalation of the West Asia conflict in September and the consequent hardening and volatility in global crude prices soured global economic sentiments and heightened financial market volatility.
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