Why Rate cuts off the table? Repo rate raised after 4 yrs as RBI Governor flags global churn

The Reserve Bank of India (RBI) recently increased the repo rate by 25 basis points to 5.50%, marking its first hike in nearly four years. This decision was made by the Monetary Policy Committee (MPC) in a 4-2 split vote, signaling a shift from a neutral to a calibrated tightening stance. RBI Governor Sanjay Malhotra highlighted four key headwinds that are causing global economic uncertainty.

These include the ongoing conflict in West Asia, tariff-related uncertainties, elevated bond yields, and the potential for a sharp correction in the valuation of AI stocks. Malhotra emphasized that while these factors are weighing on global growth and inflation, the Indian economy remains resilient. He pledged to implement policies that will sustain this resilience and ensure price and financial stability for sustainable growth in the long run.