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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.

RBI governor Sanjay Malhotra announces raising repo rates by 25 basis points Follow live updates here: RBI hikes repo rate for first time since February 2023 MUMBAI: The RBI raised the repo rate by …

RBI governor Sanjay Malhotra announces raising repo rates by 25 basis points Follow live updates here: RBI hikes repo rate for first time since February 2023 MUMBAI: The RBI raised the repo rate by a widely expected 25 basis points to 5.50% on Wednesday as stronger-than-expected growth and broader price pressures prompted the Monetary Policy Committee to unanimously vote for a hike and shift its stance from neutral to calibrated tightening.The move will raise the EMI on a Rs 1 crore loan over 15 years by around Rs 1,500 a month, or about Rs 1,471 at a base rate of 8.50%. If the EMI remains unchanged, the higher rate could extend the loan by about 5.5 to 5.9 months, equivalent to six additional instalments. The rate hike is good news for savers and retired individuals living on fixed income. Bajaj Finance has been the first to announce a 15 to 40 bps increase in fixed deposit rates following the RBI decision.The RBI raised its FY27 real GDP growth forecast by 40 basis points from the August review to 7.1%, driven largely by a sharp revision in Q2 growth to 7.2% from 6.4%. The Q3 forecast was also raised while the Q4 projection was unchanged.The FY27 inflation forecast was raised by 20 basis points to 5.2%. All quarterly forecasts provided for comparison were revised higher, with the largest increase being the 30-basis-point rise in the Q1 FY28 forecast to 5.6%, while the core inflation forecast was raised to 4.4%.RBI governor Sanjay Malhotra said that strong capacity utilisation, healthy bank credit growth and the central government's continued capital expenditure and infrastructure push were supporting investment. Double-digit growth in merchandise exports, buoyant services trade and bilateral trade agreements were also supporting aggregate demand.CPI inflation rose to 4.8% in Aug from 4.5% in July. Malhotra said price increases had broadened beyond volatile items, with food inflation becoming more widespread, including increases in sugar and onion.He said the change in stance meant rate cuts were no longer the likely next move. "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,” he said.The MPC expects headline CPI inflation to average nearly 5.8% over the subsequent three quarters. Malhotra said the inflation outlook had changed from a year earlier. "In the light of available data, it is clear that inflation and its outlook are not benign as they were last year... In this milieu, recalibrating the policy rate is imperative," he said.Headline CPI inflation is projected at 5.2% for FY27, peaking at 6.0% in Q3 before easing to 5.7% in Q4 and 5.6% in Q1 FY28.Deficient southwest monsoon rainfall and prevailing El Niño conditions pose risks to agricultural output. Renewed conflict in West Asia has increased crude oil price volatility, keeping energy and other input costs elevated.The indirect pass-through of commodity and energy costs is unfolding alongside upside risks from rapid growth in domestic monetary and credit aggregates.Malhotra said the indicators did not allow the RBI to cleanly separate second-round effects from supply pressures. "It may, however, be kept in mind that it is difficult to distinguish between the second-round effects and the indirect impact of supply side pressures (in production cost through energy and other inputs) as both are present in these indicators," he said.The RBI also cited tighter global financial conditions, US Federal Reserve rate hikes, high global bond yields and geopolitical instability in West Asia as external risks. It said India's external sector provided buffers against these pressures through steady capital inflows, remittances, services exports, a recovery in merchandise trade and foreign exchange reserves.

No. FD interest is taxable according to the depositor's applicable income-tax rules. The actual tax payable depends on total taxable income and the applicable tax regime. Banks deduct TDS when interest on an FD …

No. FD interest is taxable according to the depositor's applicable income-tax rules. The actual tax payable depends on total taxable income and the applicable tax regime. Banks deduct TDS when interest on an FD for a senior citizen crosses Rs 1 lakh in a specific bank. TDS is not an additional tax and can be claimed as a refund or adjusted against the final tax liability when filing the ITR. A senior citizen can submit Form 15H (now renumbered as Form 121 under the Income Tax Act, 2025) to avoid TDS if eligible under the applicable conditions.

Indian central bank hikes rates for first time in more than 3 years MUMBAI The RBI's rate hike was its first in more than three years. (AFP Photo) India's central bank hiked interest rates …

Indian central bank hikes rates for first time in more than 3 years MUMBAI The RBI's rate hike was its first in more than three years. (AFP Photo) India's central bank hiked interest rates for the first time in more than three years on Oct. 7, as the Middle East conflict stokes inflation in Asia's third-largest economy and batters a weakened rupee. The Reserve Bank of India (RBI) said the benchmark repurchase rate, the level at which it lends to commercial banks, would be raised by 25 basis points to 5.5 percent after a unanimous vote by a six-member panel. In doing so, the RBI shifted gears to join several central banks around the world who have raised rates to curb price rises or boost their currencies. Since the outbreak of the Iran war in February, the RBI has stood pat as it waited to assess the impact of volatile oil prices on the world's fastest-growing major economy. But resilient GDP growth last quarter has allowed it to focus on higher costs in a country that imports most of its energy and has been hit by a weak monsoon that could result in a spike in food prices. Retail inflation rose to 4.82 percent in August — the third straight month that headline inflation breached the RBI's medium term target of four percent — with data signalling that inflationary pressures had spread beyond food and transport. Adding to the central bank's calculations is pressure on the Indian rupee, which has been at near record lows over the past week. To stem the fall, the RBI has rolled out an array of moves to woo dollar inflows, including a deposit scheme for the Indian diaspora that raked in around $127 billion. While the steps helped stop the rupee's losses, the currency has faced fresh challenges as foreign investors continue to dump Indian equities and crude hovers around $100 a barrel. India, the world's third-largest buyer of oil, normally sources about half of its crude through the Strait of Hormuz, which has been effectively closed since the beginning of the Middle East war. Analysts say this makes India among the most vulnerable economies to a global energy shock, as higher crude and fertiliser prices drive up the import bill.

The Reserve Bank of India has increased the repo rate to 5.50% after maintaining it for several months. This shift to a calibrated tightening stance indicates a focus on controlling inflation risks. Retail inflation …

The Reserve Bank of India has increased the repo rate to 5.50% after maintaining it for several months. This shift to a calibrated tightening stance indicates a focus on controlling inflation risks. Retail inflation rose recently, prompting the central bank t… After cutting rates by 125 basis points in 2025 and then keeping the repo rate unchanged at 5.25% for four straight policy reviews, the Reserve Bank of India has changed course.On Wednesday, the RBI …