RBI raises repo rate by 25 bps to 5.5%, shifts stance to ‘calibrated tightening’
AI Market Summary
RBI surprised with a 25 bp repo hike to 5.5% and shifted stance to "calibrated tightening", explicitly taking near-term cuts off the table. Inflation forecasts were revised higher amid monsoon and oil volatility, while FY2027 growth was marked up, implying tighter policy despite resilience. Higher rates can tighten domestic liquidity and lift INR carry, while raising duration sensitivity across local rates and risk assets.
Impact level
● Medium
Affected assets
NCFXUSD2INR/USDT+0.31%
AI Insight · NCFXUSD2INR/USDTAI Insight
▼ Bearish
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The Reserve Bank of India raised its repo rate by 25 basis points to 5.5% and shifted its policy stance to “calibrated tightening,” aligning with a broader global tightening cycle. The central bank expects headline CPI inflation to average 5.8% over the next three quarters, while core CPI is projected at 4.4% for financial year 2027. Despite global economic uncertainty, it lifted its financial year 2027 GDP growth forecast to 7.1% from 6.7% and adjusted its quarterly projections.
