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Stance shifts to calibrated tightening Live Events Global risks remain elevated Indian economy remains resilient Manufacturing, services remain in expansion Growth outlook Inflation pressures broadening Inflation outlook Exchange rate, financial market measures as a …

Stance shifts to calibrated tightening Live Events Global risks remain elevated Indian economy remains resilient Manufacturing, services remain in expansion Growth outlook Inflation pressures broadening Inflation outlook Exchange rate, financial market measures as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Monetary Policy Committee (MPC) unanimously voted to raise the policy repo rate by 25 basis points to 5.50% after a detailed assessment of evolving macroeconomic and financial conditions, developments and the outlook.The Standing Deposit Facility (SDF) rate now stands at 5.25%, while the Marginal Standing Facility (MSF) rate and bank rate have been raised to 5.75%.The MPC changed its policy stance to calibrated tightening, with the decision taken by a 4-2 majority.RBI Governor Sanjay Malhotra said available data showed that inflation and its outlook were no longer as benign as they were last year.He also indicated that rate cuts are off the table in the near term. Future policy action would either be a rate hike or a pause, depending on evolving economic conditions and the outlook.Malhotra said the re-escalation of the West Asia conflict in September, along with volatility in global crude oil prices, had soured global economic sentiment and heightened financial market volatility.He said escalating energy costs and rising food prices were expected to push up global inflation, prompting monetary policy tightening by major central banks.Lingering trade uncertainty, rising bond yields in advanced economies and an appreciating dollar are also keeping global financial market sentiment fragile.Malhotra said further tightening of global financial conditions, uncertainty over the fair valuation of AI stocks and the lack of a resolution to the West Asia conflict pose significant downside risks to the global economic outlook.Malhotra said the Indian economy remained strong, with economic momentum broad-based despite challenging global conditions.Real GDP growth stood at 7.8% in Q1, supported by resilient consumption and strong investment activity, which rose nearly 12%. Net exports also continued to make a positive contribution.High-frequency indicators for Q2 suggested that economic activity was maintaining momentum, although some moderation was visible compared with the previous quarter.Malhotra said manufacturing activity continued to hold up despite some pressures, as reflected in higher-frequency indicators and PMI readings.Both manufacturing and services PMI remained in the expansion zone in Q2, although the pace of expansion slowed from Q1.Private consumption also remained broadly resilient, supported by discretionary spending. Some weakness was, however, seen in non-durable goods and domestic air passenger traffic.Malhotra said real GDP growth for the year is projected at 7.1%, with growth estimated at 7.2% in Q2, 6.9% in Q3 and 6.8% in Q4, while growth in Q1 next year is projected at 7.1%. He said the 40 basis point upward revision to the growth forecast underscored the resilience of economic activity despite global headwinds, with risks to the growth outlook remaining evenly balanced.Looking ahead, Malhotra said global economic uncertainty will continue to have some bearing on domestic economic activity. While energy prices and supply chain pressures have continued, their near-term trajectory remains uncertain amid the lingering West Asia conflict. He said their adverse impact is being contained through active diversification of supply sources.He said deficient southwest monsoon and strong El Niño conditions pose risks to the agriculture sector and rural demand, although healthy foodgrain buffers and proactive government policy interventions are expected to mitigate the impact. Continuing momentum in services and broadly stable employment conditions are likely to support urban demand.Malhotra said strong capacity utilisation, robust credit flows and the government's thrust on infrastructure are expected to sustain investment activity. Services exports are expected to remain buoyant, while bilateral trade agreements should boost merchandise exports.Malhotra said food and fuel inflation picked up in August, partly due to unfavourable base effects.Headline inflation rose to 4.2% in August, after remaining at 3.9% for three consecutive months.He said broader price pressures were visible in diffusion indices, with the weighted share of items recording inflation above 4% rising to about 37% in August.There were also early signs of inflation becoming more generalised, with core inflation rising and higher inflation being recorded across a larger share of the CPI basket.Malhotra said CPI inflation for the year is projected at 5.2%, with inflation estimated at 4.9% in Q2, 6% in Q3 and 5.7% in Q4, while Q1 next year is projected at 5.6%. He said the risks to the inflation outlook are evenly balanced, while core inflation for the year is projected at 4.4%.Malhotra said while there was some evidence of elevated inflation expectations and a broadening of inflation, there were limited signs of supply-side pressures becoming embedded in pricing behaviour.Malhotra said the RBI remains committed to ensuring orderly adjustments in the exchange rate in line with the country’s underlying macroeconomic fundamentals, while curbing excessive volatility.He said the RBI is allowing interoperability among NBFC account aggregators. It is also facilitating SEBI-regulated depositories to include deposit account information in their consolidated account statements, allowing people to receive a single statement covering securities, equity, debt and bank deposit accounts. These measures will be implemented by the end of this year.Malhotra also said the RBI will constitute a technical consultative committee for financial markets in response to rapidly evolving financial market developments. The committee will provide a forum for structured engagement with market participants and other stakeholders on policy and operational matters related to financial markets.

RBI Repo Rate: The Reserve Bank of India increased the repo rate by 25 basis points to 5.50% after recent inflation concerns. Economic growth has exceeded expectations, prompting the central bank to adjust its …

RBI Repo Rate: The Reserve Bank of India increased the repo rate by 25 basis points to 5.50% after recent inflation concerns. Economic growth has exceeded expectations, prompting the central bank to adjust its monetary policy. Inflation risks are rising due t… The Reserve Bank of Indias decision to raise the repo rate by 25 basis points to 5.50% comes down to three broad shifts in the macroeconomic picture. The country's growth has held up better than expe…

RBI MPC October 2026: The Reserve Bank of India has increased the repo rate by 25 bps from 5.25% to 5.50%, signaling a shift. Following this decision, banks are expected to raise fixed deposit …

RBI MPC October 2026: The Reserve Bank of India has increased the repo rate by 25 bps from 5.25% to 5.50%, signaling a shift. Following this decision, banks are expected to raise fixed deposit interest rates in the near future. Retail inflation has been risin… Fixed deposit (FD) investors have been struggling with the lowest interest rate cycle in the last four years. However, they may see the return of the rising-rate era as the Reserve Bank of India (RBI…

The Reserve Bank of India on Wednesday raised interest rates for the first time since 2023, joining several major central banks in tightening monetary policy to arrest accelerating inflation. The central hiked the benchmark …

The Reserve Bank of India on Wednesday raised interest rates for the first time since 2023, joining several major central banks in tightening monetary policy to arrest accelerating inflation. The central hiked the benchmark repo rate by 25 basis points to a 1… The Reserve Bank of India on Wednesday raised interest rates for the first time since 2023, joining several major central banks in tightening monetary policy to arrest accelerating inflation.The cent…

RBI GDP Growth 2026: The Reserve Bank of India increased its economic growth forecast for fiscal 2026-27 to 7.1%. The adjustment follows stronger-than-expected domestic activity, particularly a remarkable 7.8% growth in the April-June quarter. …

RBI GDP Growth 2026: The Reserve Bank of India increased its economic growth forecast for fiscal 2026-27 to 7.1%. The adjustment follows stronger-than-expected domestic activity, particularly a remarkable 7.8% growth in the April-June quarter. Despite this op… The Reserve Bank of India (RBI) raised its forecast for India's economic growth in fiscal 2026-27 to 7.1% on Wednesday, as stronger-than-expected domestic activity and a 7.8% expansion in the April-J…

Live Events Why the RBI changed its inflation outlook The bigger worry: Will supply shocks become broader inflation? What economists expected What global central banks are doing as a Reliable and Trusted News Source …

Live Events Why the RBI changed its inflation outlook The bigger worry: Will supply shocks become broader inflation? What economists expected What global central banks are doing as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Reserve Bank of India has revised its inflation forecast for FY27 to 5.2%, from 5.0% earlier, as higher crude oil prices, food costs and a weaker rupee complicate the outlook for price stability.The Monetary Policy Committee’s latest assessment comes at a time when retail inflation has moved above the RBI’s 4% target, while the escalation in West Asia has created a fresh risk to fuel and imported inflation.Governor Sanjay Malhotra announced the MPC’s decision on Wednesday, with the inflation outlook emerging as one of the most closely watched parts of the policy review. The central bank has also projected inflation at 4.9%for the second quarter, 6% for the December quarter, Q4 at 5.7% and 5.6% for the June quarter of FY28, with risks evenly balanced.Malhotra said the broadening of price pressures was visible in the RBI’s diffusion indices. The weighted share of items with inflation above 4% increased to about 37% in August. He said the near-term inflation outlook pointed to continued supply-side pressures due to a variety of factors, including the monsoon deficit, El Niño conditions and high volatility in international oil prices.The RBI’s August forecast had pegged FY27 CPI inflation at 5.1%, after it raised the projection from 4.6% at the previous review. The central bank had estimated inflation at 4.2% in the first quarter, 5.1% in the second, 5.9% in the third and 5.4% in the fourth quarter.The RBI has also raised the repo rate by 25 basis points to 5.50, marking its first rate hike since February 2023. The move signals a shift in the central bank’s approach as inflation risks have increased, particularly from crude oil and food prices. The RBI had cut the repo rate by a cumulative 125 basis points in 2025 before keeping it unchanged at 5.25% for four consecutive reviews.The RBI’s inflation outlook has become less comfortable as price pressures have started spreading beyond a few individual items.CPI inflation increased to 4.8% in August from 4.5% in July, with the rise predominantly driven by higher inflation in food and fuel. The RBI noted that core inflation had also picked up, indicating signs of widening price pressures.The central bank said the weighted share of items in the headline CPI basket recording inflation above 4% had risen steadily to about 37% in August.The concern, therefore, is not simply whether food inflation remains elevated. The RBI is also watching whether higher input costs and supply shocks start feeding into broader pricing behaviour.Crude oil has become an important risk.The re-escalation of the West Asia conflict has triggered sharp volatility in crude oil prices and added uncertainty to India's inflation outlook. Higher energy prices can raise transportation, fuel and production costs and eventually feed into consumer prices.The RBI also flagged the impact of the deficient south-west monsoon and strong El Niño conditions on agriculture and rural demand.El Niño can disrupt rainfall patterns and affect agricultural output. A weaker or uneven harvest can push up prices of food items, adding to headline inflation. The RBI, however, said healthy foodgrain buffers and proactive government measures are expected to mitigate some of the impact.This is one of the key reasons behind the RBI’s decision to raise rates.The central bank acknowledged that much of the current inflation pressure is coming from the supply side. Monetary policy cannot directly increase food supplies or bring down global crude prices.But the RBI said monetary policy can help prevent these temporary shocks from creating second-round effects.These include higher inflation expectations and changes in the way companies set prices.The MPC said there was some evidence of elevated inflation expectations and inflation becoming more generalised. However, it also noted that there were only limited signs of supply-side pressures becoming embedded in firms’ pricing behaviour.This distinction is important.The RBI is effectively trying to act before a supply shock becomes entrenched across the economy.The October policy was expected to mark a shift in the RBI’s approach to inflation. In an ET poll of 21 economists and bank executives, 20 expected a 25-basis-point repo rate hike to 5.50%, while one expected the RBI to keep the rate unchanged at 5.25%. The expectations had changed sharply from the August policy, when the MPC had unanimously opted for a status quo and retained its neutral stance.The call for a rate hike was driven by a combination of higher crude oil prices, rising retail inflation, weaker farm output risks and a narrowing interest-rate differential with the US. Brent crude had risen well above the RBI’s earlier FY27 assumption of $85 a barrel, while August retail inflation had climbed to 4.82% from 4.45% in July. Economists also expected inflation to move above the RBI’s 6% upper tolerance limit in the December quarter. IDFC First Bank, for instance, expected December-quarter inflation at 6.1%, while Bandhan AMC saw it at above 6%.SBI Research had taken a more cautious view, forecasting CPI inflation at around 5.65% in September and above 6.5% in October and November before easing below 6% in early 2027. It had also expected the RBI to raise its FY27 inflation projection by 20 basis points at the October review.The RBI’s move also comes as major developed-market central banks have started tightening policy in response to renewed inflation risks. The US Federal Reserve raised its policy rate by 25 basis points in September to 3.75%-4%, saying inflation remained elevated and the move would support a return towards its 2% goal.The European Central Bank also raised its three key rates by 25 basis points in September, citing inflationary pressures from the Middle East conflict. It raised its 2026 inflation forecast to 3%, from the earlier projection, and said higher energy prices were likely to keep inflation above target into the first half of 2027. The ECB expects inflation to return towards its 2% target only towards the end of 2027.Japan has taken a similar direction. The Bank of Japan raised its policy rate in September to a 31-year high and Governor Kazuo Ueda has since stressed the need to keep underlying inflation anchored around its 2% target. The BOJ is also assessing the impact of higher raw-material costs, a weak yen and geopolitical tensions, with markets expecting further tightening in the coming months.

While many consumers may be relieved there are tax cuts to help them navigate the rising energy prices, the alarming truth about the Budget is buried in the detail which received little attention in …

While many consumers may be relieved there are tax cuts to help them navigate the rising energy prices, the alarming truth about the Budget is buried in the detail which received little attention in Dáil speeches yesterday. The Government is running a surplus of €9 billion next year. On the surface, the public finances look healthy with unemployment low and the economy purring along nicely. But the Department of Finance last night said €23 billion of the corporation tax paid by multinationals is categorised as transient. In other words, this is money which is taxed in Ireland but is related to activity abroad. Take the example of a US pharmaceutical company with an Irish subsidiary. The division in Ireland contracts some manufacturing to a subsidiary in Poland. The Polish-made product is shipped to the US where it is sold. However, because the Irish operation commissioned the manufacturing, the profit is booked here. This activity is taxed in Ireland, but the profits could easily be booked in another country. If these transient corporation tax receipts are stripped out of the public finances, Ireland's surplus becomes an underlying deficit of €13.4 billion next year. But it gets worse. The Department of Finance’s figures show the country will become increasingly reliant on these volatile tax payments. By 2029, the underlying deficit will soar to €20 billion. That is the same amount as the entire budget for the departments of education and children. Some years ago, Ireland was seen as too dependent on the technology and pharmaceutical sectors, then it became clear the country was relying excessively on specific companies. But now the worry is it is too reliant on specific products. Put another way, if the world’s consumers fall out of love with Apple’s iPhones and take less Mounjaro, Eli Lilly's weight loss drug, Ireland’s economic model is in deep trouble. Last night the Irish Fiscal Advisory Council said just three companies pay nearly half of all corporation tax. In recent years those firms were Apple, Microsoft and Eli Lilly. Another area of vulnerability is that the overall surplus, including all corporation tax payments, is expected to shrink over the next three years. It means Ireland’s public finances will become more fragile. The Irish Fiscal Advisory Council says: "The Government continues to use high-risk receipts to fund permanent tax and spending measures. It plans to spend about six in seven euros of all corporation tax revenues it takes in. Most of it is for current spending." Unfortunately, these warnings are not new. Economists have been cautioning about this danger in the public finances for years. But the dependence on a small number of companies has become more pronounced. It means if the corporation tax receipts dry up, Ireland is facing a "disastrous repeat of the cutbacks" it suffered during the financial crisis of 2008, according to the Irish Fiscal Advisory Council. Politicians know this. But there are few votes in running larger surpluses and curtailing expenditure. In the meantime, the Irish economy will motor onwards as if everything is grand. Nothing to see here, move along.

Live Events as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel …

Live Events as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, raised the policy repo rate by 25 basis points to 5.50% on Wednesday, marking its first rate hike since February 2023, as rising crude oil prices, food inflation and weather-related risks clouded the inflation outlook.The RBI also raised its FY27 GDP growth forecast to 7.1% from 6.7% and its inflation projection to 5.2% from 5.1%, while shifting its policy stance to calibrated tightening.The MPC voted unanimously to increase the repo rate, while the decision to change the policy stance to calibrated tightening was taken by a majority of 4-2.The MPC unanimously voted to raise the policy repo rate by 25 basis points to 5.50%, the first increase since February 2023. The Standing Deposit Facility rate now stands at 5.25%, while the Marginal Standing Facility rate and the bank rate have been adjusted to 5.75%.The rate hike comes amid renewed inflationary pressures from rising international crude oil prices, higher food prices and an uneven monsoon. The RBI also flagged the challenging global environment, marked by geopolitical tensions, trade uncertainty and volatility in financial markets.“The MPC noted that the global context, on account of geopolitical developments, remains challenging. Nonetheless, the Indian economy has been strong, and the economic momentum remains broad based,” Malhotra said.The RBI raised its real GDP growth projection for FY27 to 7.1% from 6.7%, an upward revision of 40 basis points, reflecting the resilience of domestic economic activity.The central bank projected growth at 7.2% for the second quarter, 6.9% for the third quarter and 6.8% for the fourth quarter of FY27. Real GDP growth for the first quarter of FY28 is projected at 7.1%.The RBI said high-frequency indicators for the second quarter pointed to sustained economic momentum, supported by steady services activity, manufacturing resilience, domestic demand and investment. Both manufacturing and services purchasing managers’ indices remained in expansionary territory.However, global economic uncertainty, supply-chain disruptions, elevated commodity prices and geopolitical tensions could weigh on the outlook. A weak southwest monsoon and strong El Niño conditions could also affect the upcoming rabi season and rural demand.The RBI raised its CPI inflation forecast for FY27 to 5.2% from 5.1%, reflecting persistent price pressures from food and fuel.Retail inflation rose to 4.8% in August from 4.5% in July, driven largely by higher food and fuel inflation. The central bank also flagged a broadening of price pressures across food commodities and early signs of inflation becoming more generalised.The RBI projected CPI inflation at 4.9% for the second quarter, 6% for the December quarter and 5.7% for the fourth quarter of FY27. Inflation for the first quarter of FY28 is projected at 5.6%, with risks evenly balanced. Core inflation for FY27 is projected at 4.4%.The central bank highlighted the risks posed by volatile international oil prices, deficient and uneven monsoon rainfall and El Niño conditions, which could affect agricultural output and food prices.The MPC changed its policy stance to calibrated tightening by a majority of 4-2, signalling a sharper focus on containing inflationary pressures.The central bank said inflation and its outlook were no longer as benign as they had been in the previous year. While there was some evidence of elevated inflation expectations and a generalisation of price pressures, the RBI noted limited signs of supply-side pressures becoming embedded in pricing behaviour.The governor underscored that rate cuts were no longer an option in the near term.“Given the current conditions, rate cuts are off the table in the near term, and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook,” Malhotra said.The duration and extent of any rate-hike cycle, he added, would depend on actual growth and inflation developments, underlying inflation, the broadening of price pressures and the second-round effects of supply shocks.System liquidity increased substantially over the previous two months following measures undertaken to attract capital inflows. The average daily surplus liquidity, measured by the net position under the liquidity adjustment facility, stood at ₹5.9 lakh crore since the previous MPC meeting.Subsequent liquidity-absorption measures and quarterly advance-tax outflows moderated the surplus somewhat in September. The weighted average call rate largely traded in the lower half of the policy corridor, while short-term money-market rates moderated significantly.The RBI said it would continue using an appropriate mix of liquidity-management tools to align the weighted average call rate with the policy repo rate.The RBI announced two additional measures alongside its monetary policy decisions.First, it will allow interoperability among non-banking financial company account aggregators, enabling users to aggregate financial information across different account aggregators by onboarding with just one.Second, the central bank will facilitate SEBI-regulated depositories in including bank deposit account information in consolidated account statements. This will allow individuals to access information on bank deposits alongside their securities, equity and debt holdings in a consolidated statement. The measures are to be implemented by the end of 2026.The RBI will also constitute a technical consultative committee for financial markets to provide a forum for structured engagement with market participants and other stakeholders on policy and operational matters.

What is calibrated tightening? A ‘calibrated tightening’ stance means the RBI is leaning towards tighter monetary policy, with rate cuts not being considered in the current policy cycle. If further rate hikes are needed, …

What is calibrated tightening? A ‘calibrated tightening’ stance means the RBI is leaning towards tighter monetary policy, with rate cuts not being considered in the current policy cycle. If further rate hikes are needed, they are likely to be gradual and measured rather than aggressive. ALSO READ: RBI MPC hikes repo rate by 25 bps to 5.25%: A look at last five hikes The RBI will assess inflation, growth, and other economic conditions before deciding whether to raise rates further. Any increase is expected to be gradual and measured, and the central bank can also adjust rates between scheduled MPC meetings if necessary. Why has the RBI shifted its stance? The change comes as inflation risks have increased and global conditions have become less favourable. Retail inflation rose to 4.82 per cent in August, moving above the RBI’s 4 per cent target for the third consecutive month. Higher crude oil prices and pressure on the rupee have added to concerns about imported inflation.

The Reserve Bank of India’s MPC on Wednesday hiked the repo rate by 25 basis points to 5.5 per cent and changed the policy stance to 'calibrated tightening' from neutral. Experts said the central …

The Reserve Bank of India’s MPC on Wednesday hiked the repo rate by 25 basis points to 5.5 per cent and changed the policy stance to 'calibrated tightening' from neutral. Experts said the central bank struck a balanced tone by acknowledging persistent global uncertainties while expressing confidence in domestic growth and easing inflation. Experts' view on MPC outcome Ajit Mishra, Senior VP, Research at Religare Broking The RBI’s 25 bps repo rate hike to 5.50 per cent, coupled with the shift to a calibrated tightening stance, signals a meaningful change in the policy cycle. While the hike itself was largely expected, the change in stance is the more important takeaway, indicating that inflation risks are now taking greater precedence. August CPI at 4.82 per cent, elevated crude prices and weather-related risks have clearly narrowed the room for policy accommodation. Importantly, Q1 FY27 GDP growth at 7.8 per cent suggests that the economy can absorb a modest tightening in financial conditions. We expect the near-term market impact to remain selective, with rate-sensitive pockets facing pressure, while banks with stronger balance sheets and liability franchises should remain relatively better placed.” Dnyanada Vaidya, Research Analyst - BFSI, Axis Direct With crude prices remaining firm and inflationary pressures continuing to linger, the RBI’s decision to hike repo rates was largely anticipated. We expect another 25 bps rate hike to follow in the next MPC meeting. The regulator increased its growth forecast by 40 bps to 7.1 per cent for FY27, while continuing inflationary pressures prompted the RBI to increase the inflation forecast to 5.2 per cent vs 5 per cent earlier. All eyes will now be on Q2 earnings for the banking space, with focus remaining on margins, which appear to be the only pain point at the moment, while growth holds firm and asset quality continues to remain resilient. Similar trends are visible in the provisional numbers reported by banks. Credit growth has remained strong and is expected to be broad-based. Deposit growth, which was hovering between 11-12 per cent over the last few quarters, has picked up, meaningfully supported by strong FCNR(B) inflows. However, near-term margins will continue to see pressure due to excess liquidity and lower-spread lending. Outlook for NIMs turns constructive for H2, with rate hikes reflecting in EBLR-linked portfolios of banks. We believe private banks, especially larger private banks, would be bigger beneficiaries. Asset Quality remains in a sweet spot, with no challenges visible from the prolonged West Asia conflict. Rishabh Nahar, Partner and Fund Manager at Qode Advisors The real message from today’s MPC is not the 25 bps hike, but the RBI’s willingness to change its reaction function. Moving to calibrated tightening suggests the RBI is no longer comfortable treating inflation as merely a transient oil shock. For equity markets, this marks a subtle but important shift: the easy valuation tailwind from lower rates is beginning to fade, and earnings will increasingly have to justify valuations. In such an environment, I would expect the market to reward genuine earnings compounding and pricing power rather than broad-based liquidity-driven expansion Garima Kapoor, Deputy Head of Research and Economist at Elara Capital Continuing commodity prices pressures are likely to put upside pressure on inflation as growth remains resilient allowing quick pass-through of input prices to retail prices. The rising interest rate backdrop globally has also reduced RBI's degrees of freedom. We see a likelihood of another 50 bps hike this cycle. Sandeep Agarwal, CEO & CIO, Modulus Alternatives The RBI’s 25 bps rate hike, taking the repo rate to 5.50 per cent, marks an important shift in the interest-rate cycle. The move reflects the growing focus on inflation risks amid elevated crude prices, global yields and currency pressures, while India’s underlying growth momentum remains resilient. For credit markets, the impact will extend beyond the immediate increase in borrowing costs. A higher-rate environment places greater emphasis on the quality of cash flows, debt-servicing capacity and the strength of the underlying security. For private credit, this reinforces the importance of disciplined underwriting and structuring, with greater selectivity around businesses that have sound fundamentals and clear visibility on repayment. The more important signal from here will be the RBI’s forward guidance and whether this marks the beginning of a broader tightening cycle. For businesses and lenders alike, the ability to navigate the rate cycle with balance-sheet discipline will become increasingly important. Arun Poddar, CEO, Choice International Limited The RBI’s decision to raise the policy repo rate by 25 basis points to 5.5 per cent and shift its stance from neutral to calibrated tightening signals a shift towards a tightening cycle. It reflects a measured response to emerging inflationary pressures amid resilient growth. The change in stance also indicates that the central bank remains watchful of evolving domestic and global risks, particularly movements in crude oil prices and their potential impact on inflation. Aditya Agarwala, Co-Founder & CIO, InvestValue Capital While the rate hike could result in some near-term tightening in financial conditions, India’s underlying growth fundamentals remain resilient. For equity markets, the focus will now be on the trajectory of inflation, liquidity and the evolving interest-rate environment. A calibrated and data-dependent approach by the RBI will be important in containing inflationary pressures while supporting sustainable economic growth. The 25 bps hike was well telegraphed. The real message is the shift to 'calibrated tightening' alongside a 40 bps upgrade to FY27 growth. The RBI is tightening from a position of strength, not stress. With inflation projected to peak near 6 per cent in Q3 and oil and the rupee adding pressure, pre-empting second-round effects is the prudent call. The 4–2 split on the stance also tells us this is a measured adjustment, not the start of an aggressive hiking cycle. For equity investors, the takeaway is that the cost of capital has bottomed for now. Highly leveraged and rate-sensitive pockets may see near-term pressure. Over 7 per cent growth economy, however, still supports earnings. We would stay focused on businesses with pricing power, clean balance sheets and the ability to fund growth internally. In a rising-rate phase, quality tends to compound while leverage gets exposed. Disclaimer: View and outlook shared belong to the respective brokerages/analysts and are not endorsed by Business Standard. Readers discretion is advised.