India's Central Bank Raises Rates For First Time Since 2023

By Kimberley Kao

India's central bank raised interest rates for the first time in more than three years as the Middle East conflict keeps energy prices high, hurting the rupee and fueling inflation fears.

The Reserve Bank of India's monetary policy committee voted unanimously to raise its benchmark repo rate by 25 basis points to 5.50%, ending a pause spanning four consecutive meetings.

The MPC voted to change its stance to "calibrated tightening" from "neutral," by a majority of 4-2.

Nine of 10 economists surveyed by The Wall Street Journal had expected a 25-basis-point increase. The RBI last raised rates in 2023.

Disruptions to oil shipments through the Strait of Hormuz have pushed up energy costs, putting pressure on India's economy after a period of strong growth. Higher crude prices threaten to swell its import bill, while a weaker rupee makes dollar-priced imports more expensive.

The rupee has fallen more than 7% against the dollar this year, pressured by higher oil prices and capital outflows. Headline inflation rose to 4.8% in August.

"The incoming data on domestic inflation and growth, coupled with a global backdrop of higher U.S. rates and commodity prices provides little room to wait," BofA economists said ahead of the decision.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

October 07, 2026 01:00 ET (05:00 GMT)