India's Central Bank Raises Repo Rate 25 Basis Points to 5.5%, First Hike in Nearly Four Years

India's central bank raised its benchmark repo rate by 25 basis points to 5.5% on Wednesday, its first increase in nearly four years, citing mounting inflation and resilient economic growth. The Reserve Bank of India also shifted its policy stance to "calibrated tightening." Economists expect further tightening. Sakshi Gupta of HDFC Bank forecasts another 50 to 75 basis points of hikes in coming months, while Krishna Bhimavarapu of State Street Investment Management projects 100 basis points of cumulative tightening this cycle. Garima Kapoor of Elara Securities sees a likely additional 50 basis points. Anuj Puri, chairman of ANAROCK, said the hike will pressure consumer sentiment and discretionary spending, directly affecting housing demand during the key festive season. Sujan Hajra of Anand Rathi said resilient domestic growth provided room to act, while rising food prices, elevated crude prices and rupee depreciation favored tightening.