RBI Raises Repo Rate to 5.5 Percent, Signals Stronger Growth Outlook

RBI announces a 25‑basis‑point increase in the key repo rate, moving it to 5.5 percent, after its monetary policy committee meeting. The move aims to curb inflation while supporting a revised GDP growth forecast. The decision also keeps the repo rate above the inflation target range, reinforcing monetary tightening.

GDP Forecast is lifted to 7.1 percent, reflecting the central bank’s confidence in domestic demand and export momentum, and improved consumer sentiment, according to the policy statement released after the rate decision.

Borrowing Costs for ultra‑short‑term funds have surged, with the spread over the policy rate reaching a four‑year high, signaling tighter liquidity conditions for banks and corporations seeking immediate financing.

Market Reaction shows muted movement as investors weigh the higher rate against the stronger growth outlook, while analysts note that future policy steps will depend on inflation trends and credit demand.