The Reserve Bank of India raised the repo rate by 25 basis points to 5.5% from 5.25% and shifted its policy stance from neutral to calibrated tightening on Wednesday.
The repo rate is the annualized interest rate at which the RBI lends money to commercial banks against short-term collateral such as government securities.
The rate hike aims to help control inflation and liquidity in the economy while indirectly influencing borrowing costs for consumers.