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Decording RBI Rate Hike: 5 Technical Terms Explained
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News18•07-10-2026, 11:30
Decording RBI Rate Hike: 5 Technical Terms Explained
- •The Reserve Bank of India raised the policy repo rate by 25 basis points to 5.50 per cent due to rising inflation risks.
- •Calibrated tightening signals that monetary policy is now tilted towards fighting inflation rather than supporting growth.
- •Second-round effects refer to knock-on impacts like higher wages and prices following an initial supply shock.
- •Underlying inflation strips out volatile components to determine if inflationary pressure is becoming entrenched.
- •The policy corridor consists of the repo rate, Standing Deposit Facility rate, and Marginal Standing Facility rate.
Key Questions Answered
Following a 25-basis-point hike due to rising inflation risks, the Reserve Bank of India set the policy repo rate at 5.50 per cent.
Calibrated tightening signals that the monetary policy is tilted toward fighting inflation rather than supporting growth, meaning future policy actions will be limited to a rate hike or a pause depending on incoming data.
After the latest adjustment, the Standing Deposit Facility (SDF) rate stands at 5.25 per cent, the repo rate is at 5.50 per cent, and the Marginal Standing Facility (MSF) rate and Bank Rate stand at 5.75 per cent.
