RBI raised the repo rate by 2
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Monetary policy and currency management: a key GS3 topic on inflation targeting and external shocks.
Why in news
The RBI raised the repo rate by 25 basis points to 5.50% in its first hike since 2023 to adopt a calibrated tightening stance despite a weakening rupee.
Background
The RBI's repo rate was hiked to 5.50% in October 2026. The USD/INR exchange rate is currently within 20bps of its all-time low, while Brent crude oil is holding above $100.
Facts for Prelims
- FactRBI repo rate: 5.50% as of October 2026
- FactBrent crude oil price: Above $100
- FactUSD/INR: Within 20bps of all-time low
- FactBitcoin price: Fell to around $83,000 after failing at $87,000
Prelims practice question
What was the level of the 10-year Treasury yield at the time of the repo rate hike?
- (a)5.36%
- (b)7.10%
- (c)4.50%
- (d)6.25%
Show answer
Answer: (a) 5.36% — The note states that 10-year Treasury yields hit 5.36% during the repo rate hike.
For Mains
Q. Analyze the effectiveness of monetary tightening measures in stabilizing the Indian Rupee against currency depreciation and volatile global commodity prices.
Dimensions to cover in your answer
- Monetary policy trade-offs: Balancing inflation control via repo rate hikes against the impact on domestic rate-sensitive sectors.
- External shocks: Impact of high Brent crude prices and USD/INR volatility on the importer-exporter balance.
- Currency dynamics: Effectiveness of RBI dollar sales in preventing currency capitulation during periods of high global yields.
Keywords: Monetary Policy · Repo Rate · Currency Depreciation · Inflation Targeting · External Shocks · Exchange Rate Volatility
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.