Kathmandu. The Reserve Bank of India (RBI) on Wednesday hiked the policy repo rate by 25 basis points to 5.50 per cent amid rising inflationary risks, global economic conditions and strong growth in the domestic economy.

RBI Governor Sanjay Malhotra said that the Monetary Policy Committee (MPC) has unanimously decided to increase the repo rate after evaluating the macroeconomic and financial situation and the future outlook. Earlier in August, the committee had adopted a neutral policy approach, keeping the repo rate unchanged at 5.25 per cent.

After the repo rate hike, the Standing Deposit Facility Rate has been reduced to 5.25 percent and the Marginal Standing Facility and Bank Rate to 5.75 percent. The policy outlook of the MPC has been changed from a majority to tightening the monetary policy.

Inflation based on India’s Consumer Price Index (CPI) stood at 4.82 per cent in August. A weak monsoon and the risk of crude oil prices reaching $100 a barrel are expected to put further pressure on inflation in the coming days.

Meanwhile, India’s economy expanded by 7.8 per cent in the first quarter of the financial year 2026/27. Economic activity in the domestic demand, manufacturing and services sectors is strong.

Economists expect the repo rate to reach around 6 per cent by the end of the 2026-27 financial year, based on inflation, oil prices and global financial conditions.