India's first bank rate hike since 2023 signals growing inflation concerns

In his post-policy address, RBI Governor Sanjay Malhotra said the decision reflected challenging geopolitical developments, even as the Indian economy remained strong.He said cuts were "off the table for now", with the central bank likely to either raise rates further or keep them unchanged to contain inflation.The RBI projects Consumer Price Index (CPI) inflation at 5.2% for 2026-27 - higher than the 5% estimated earlier - to account for price pressure due to weather disruptions, weak monsoon and high volatility in international oil prices.Crude oil prices are hovering above $100 (£75.33) a barrel resulting in India having to pay even more as the rupee has fallen close to its all-time lows against the dollar. The country imports around 90% of its crude oil and 50% of its gas needs.The RBI last raised rates in February 2023, marking the end of its post-pandemic tightening cycle. During most of 2025, it cut rates to support economic growth before keeping policy unchanged from December 2025 until today's increase.The rate increase is in line with expectations of economists who say that rising inflation makes a compelling case for it, especially since the economy has displayed enough ...