The Reserve Bank of India, or RBI, unanimously decided to raise the repurchase rate, its policy rate, by 0.25% to 5.50% at its October 7 meeting, the first increase in nearly four years and in line with analysts' expectations. RBI Governor Sanjay Malhotra said in a statement after the meeting that the central bank's policy committee had considered data clearly indicating that inflation and the inflation outlook were not at the low levels of last year, making it necessary to adjust the policy rate. Malhotra also said that a rate cut would not be on the agenda in the near term, and that policy going forward could only involve raising rates or holding them steady. The RBI is moving in step with other Asian central banks, from the Bank of Korea to the Philippine central bank, to curb inflation after oil prices surged above 100 dollars a barrel amid tensions in the Middle East. Meanwhile, the yield on India's 10-year government bond jumped to its highest level since December 2023 after the rate hike decision.
India 10-year government bond yield jumped to its highest since December 2023 after the RBI's surprise rate hike
RBI rate hike makes Indian assets more attractive, strengthening the rupee versus the dollar
