A new rate game begins — Inside RBI’s playbook

What happened: The RBI raised the repo rate by 25 bps to 5.50%, its first hike in nearly four years, adopting a stance Governor Sanjay Malhotra called calibrated tightening. Key numbers: Repo rate 5.50%, up 25 bps. Why it matters: The RBI is acting pre-emptively so food and oil supply shocks do not feed into inflation expectations, corporate pricing and credit conditions. Rate cuts are off the table near term; the next move can only be a hike or a pause, with the cycle's duration and extent dependent on how inflation evolves.

The RBI raised the repo rate by 25 bps to 5.50%, its first hike in nearly four years, adopting a stance Governor Sanjay Malhotra called calibrated tightening.

The RBI is acting pre-emptively so food and oil supply shocks do not feed into inflation expectations, corporate pricing and credit conditions. Rate cuts are off the table near term; the next move can only be a hike or a pause, with the cycle's duration and extent dependent on how inflation evolves.