The Reserve Bank of India has raised its key repo rate by 25 basis points to 5.50 per cent, the first hike in nearly four years.

The Monetary Policy Committee shifted to a calibrated tightening stance. Two factors drove the decision: inflationary pressures persist, and growth is beating estimates.

Contrary to market expectations, the central bank announced no new liquidity measures. Bond yields may hold near 7.25 per cent after the policy shift.

Goldman Sachs characterised the move as a hawkish hike. The brokerage expects the repo rate to rise by another 25 basis points in December.

The hike is unlikely to substantially dent GDP growth, which has stayed robust across segments. But borrowers should brace for higher loan rates in the coming months.

The decision marks a clear shift in the central bank’s stance. After years of holding or cutting rates, the RBI now sees inflation risks as the bigger threat.

For savers, the hike could mean better fixed-deposit rates in the coming weeks. Banks typically revise deposit and lending rates after a policy move.