The Reserve Bank of India's Monetary Policy Committee on October 7 raised the repo rate by 25 basis points to 5.5 per cent, marking the first rate hike in nearly four years amid mounting inflation and strong economic growth.

The six-member panel voted unanimously for the hike and changed the policy stance from "neutral" to "calibrated tightening". Governor Sanjay Malhotra said the outlook for inflation was "no longer benign".

Consumer inflation accelerated to 4.82 per cent in August, staying above the RBI's 4 per cent medium-term target for a third straight month. Higher oil prices linked to the Iran war and weak monsoon rains tied to El Nino have added to price pressures.

The RBI raised its FY27 growth forecast to 7.1 per cent and its inflation projection to 5.2 per cent. GDP grew 7.8 per cent in the April-June quarter, above the central bank's forecast.

Markets reacted negatively, with the Nifty 50 falling 0.6 per cent and the Sensex 0.7 per cent. The 10-year benchmark bond yield rose 5 basis points to 7.2655 per cent, while the rupee held around 96.36 per US dollar.