The Reserve Bank of India’s Monetary Policy Committee (MPC) raised the policy repo rate by 25 basis points to 5.50 per cent on Wednesday, while shifting its stance from “neutral” to “calibrated tightening”, signalling that further rate action could be on the table amid persistent inflation risks. The rate hike was in line with market expectations, while the change in stance emerged as the key surprise from the policy review.
Reacting to the RBI’s decision, Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, said, “The MPC delivered a 25bp rate hike in line with expectations, with a surprise shift in stance towards recalibrated tightening.” She added that the bank continues to expect another 25-50 basis points of rate hikes, with the possibility of further increases if global risks persist.
The RBI’s decision comes against a backdrop of rising inflationary pressures and strong domestic growth. Consumer inflation rose to 4.82 per cent in August, while GDP growth stood at 7.8 per cent in the April-June quarter.
In Kolkata, the RBI’s tighter policy stance is likely to keep market participants focused on borrowing costs, bond yields, liquidity and the outlook for corporate credit. Businesses and investors are expected to closely track inflation, crude oil prices and further RBI guidance as these factors could influence financing conditions and market sentiment in the coming months.