RBI Increases Repo Rate to 5.50%, Banks Raise Lending Rates

The Reserve Bank of India's Monetary Policy Committee (MPC) increased the policy repo rate by 25 basis points to 5.50% on October 7, 2026. This decision was made during the MPC's 63rd meeting, held from October 5 to 7, 2026, and chaired by RBI Governor Sanjay Malhotra. Following the announcement, public sector banks such as Punjab National Bank (PNB), Bank of Baroda (BoB), Indian Bank, Bank of India, and Indian Overseas Bank, along with private sector Tamilnad Mercantile Bank, raised their lending rates by up to 0.25 percentage points, with many changes effective from October 8, 2026.

This marks the first repo rate hike by the RBI since February 2023, ending a nearly four-year period without adjustment. The decision was influenced by rising inflation pressures, particularly due to increased volatility in global crude oil prices following the re-escalation of the West Asia conflict in September. The RBI also noted the Indian economy's strong growth momentum as a factor allowing for monetary policy tightening.