India, Oct. 7 -- The Reserve Bank of India (RBI) on October 7 raised its policy repo rate by 25 basis points to 5.50%, after almost three-and-a-half years, amid inflationary pressures and continuing geopolitical tensions arising from the West Asia crisis. The rate hike could make new home loans expensive and push up EMIs for existing floating-rate borrowers, depending on how lenders transmit the increase.

The decision by the Monetary Policy Committee (MPC) marks a shift from its August policy, when it kept the repo rate unchanged at 5.25% and retained a neutral stance while seeking greater clarity on the inflation outlook and the balance between growth and inflation.

In his statement, RBI Governor Sanjay Malhotra said, "After a detailed...