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RBI Increases Repo Rate to 5.50% to Tackle Inflation Concerns - Big Monetary Policy Decision | UPSC Economy 2026 Breaking: RBI MPC Oct 2026 Meeting On 7th Oct 2026, Reserve Bank of India (RBI) raised benchmark Repo Rate by 25 bps to 5.50% - First rate hike since Feb 2023! Decision by 6-member Monetary Policy Committee (MPC) led by Governor Sanjay Malhotra - Voted UNANIMOUSLY. Key Announcements of RBI MPC October 2026: 1. Repo Rate: Hiked from 5.25% to 5.50% (+25 bps). Earlier repo was held at 5.25% in Aug, Jun, Apr, Feb 2026. Cut to 5.25% in Dec 2025 from 5.50% in Oct 2025. 2. Policy Stance: Changed from NEUTRAL to CALIBRATED TIGHTENING (4-2 majority). Means rate cuts are OFF the table in near term - Only hike or pause ahead. 3. Other Rates: SDF Rate at 5.25%, MSF Rate & Bank Rate at 5.75% 4. Why Hike? - Inflation Risks Mount: - CPI Inflation rose to 4.82% in Aug 2026 (from 4.5% in July), above RBI's 4% medium target for 3rd consecutive month - RBI raised FY27 Inflation forecast to 5.2% from 5% earlier (Q3 peak expected 5.9%) - Reasons: Higher food prices, deficient monsoon, crude oil ~$100/barrel, higher energy prices, geopolitical tensions (West Asia, US Tariffs), global uncertainties, elevated US 10-year yields at 5.3%, Fed hike in Sept. 5. Growth Outlook Strong: - FY27 Real GDP Forecast raised to 7.1% from 6.7%! - Q1 FY27 GDP grew 7.8% - beating expectations - Driven by resilient domestic demand, consumption & investment 6. Impact on You: - Borrowing costs UP - Home loan, vehicle loan, personal loan EMIs may increase - Eg: Rs 50 lakh home loan for 20 years at 8% = EMI Rs 41,822. If 8.25% = Rs 42,663 - Fixed Deposit rates may rise - good for savers Next MPC Meeting: Dec 2-4, 2026 UPSC Relevance: GS3 - Indian Economy - Monetary Policy, Repo Rate, SDF, MSF, Bank Rate, MPC, Inflation Targeting, Fiscal-Monetary coordination, Growth-Inflation dynamics Prelims: Instruments of Monetary Policy, LAF, Calibrated Tightening vs Accommodative vs Neutral Vajirao & Reddy Institute - India's Top Potential Training Institute for IAS - Daily Current Affairs from The Hindu, ET, PIB. #RBI #RepoRate #RepoRateHike #RBIHikesRepoRate #550Percent #Inflation #CPIInflation #MPCMeeting #SanjayMalhotra #MonetaryPolicy #SDF #MSF #CalibratedTightening #GDPGrowth #UPSC2026 #UPSC #Economy #GS3 #RBI MPC #TheHindu #ET #VajiraoAndReddyInstitute