New Delhi, Oct. 7 -- On Wednesday, 7 October 2026, the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) did what everyone expected it to. And more. It raised the policy repo rate 25 basis points to 5.50%. And in a split decision (4: 2), changed the stance from the earlier 'neutral' to 'calibrated tightening,' rather than the usual 'withdrawal of liquidity.'

In brief, it did what it had refused to do for more than 18 months, ever since US President Donald Trump raised tariffs against India and more than six months since the war leading to the closure of the Strait of Hormuz began. Both were suggestive of a hike in prices. As was the onset of El Niño.

Yet, for whatever reason, RBI preferred to wait and see. The net resul...