India's central bank raises interest rates for the first time in nearly four years as inflation climbs above 5%

From the Newshound archive · first published 7 October 2026.

The Reserve Bank of India has raised its benchmark repo rate by 25 basis points to 5.5%, the first increase since February 2023, with Governor Sanjay Malhotra warning that further cuts are "off the table for now". The decision comes as crude oil prices above $100 a barrel weigh on the rupee, which has slid to near record lows against the dollar. Car, home and personal loan costs will rise for Indians as commercial banks pass on the increase.

The RBI now projects CPI inflation at 5.2% for 2026-27, higher than its earlier 5% estimate, citing weak monsoons, weather disruption and volatile oil prices.

With roughly 90% of its crude oil and 50% of its gas sourced from abroad, India is acutely exposed to energy price spikes driven by conflict in the Middle East.

Sensex and Nifty benchmark indices fell after the announcement as investors weighed the hit to corporate investment and consumer spending.