The 2022–23 hiking cycle: how the RBI raised rates by 2.5 points in nine months

For two years after Covid hit, borrowing in India was as cheap as it had been in a generation. The RBI had cut the repo rate to 4.00% in May 2020 and left it there. Then, in the spring of 2022, everything changed.

What forced the RBI's hand

• WarRussia invaded Ukraine in February 2022. Oil, gas, wheat and edible oil prices jumped worldwide.
• InflationIndia's retail inflation climbed to 7.79% in April 2022, well above the RBI's 6% upper limit.
• The FedThe US Federal Reserve began raising rates aggressively in March 2022, pulling money out of emerging markets like India and weakening the rupee.

The surprise

On 4 May 2022, the RBI called an unscheduled meeting and raised the repo rate by 40 basis points to 4.40%. No one had expected it; policy was not due for another month. It was the clearest signal that the RBI now saw inflation, not growth, as the bigger risk.

What followed was relentless:

By 8 February 2023 the repo rate stood at 6.50%. That's 2.5 percentage points in nine months. The RBI then held it at 6.50% for two full years, until February 2025.

What it did to borrowers

Because most new floating-rate home loans had been linked to the repo rate since 2019, the hikes passed through faster than in any earlier cycle.

Savers came out ahead: fixed deposit rates, which had been stuck near 5% for many banks, rose steadily through 2022 and 2023.

Did it work?

Inflation did come down from its 2022 peak, helped by easing global commodity prices, and the RBI was able to hold rates steady for two years without hiking further. Growth held up better than many feared. But food prices kept bouncing around, which is why the RBI waited until 2025 to start cutting. See what happened next in the 2025 cutting cycle.

The lessons for today

• Surprises happenThe RBI can and does move between scheduled meetings when it thinks it's behind.
• Oil and the Fed matterBoth triggers of 2022, a global energy shock and a hawkish Fed, are back in 2026. That's why the RBI raised rates again on 7 October 2026. Read our explainer on that hike.