The Reserve Bank of India’s Monetary Policy Committee (MPC) voted unanimously on 7 October 2026 to raise the policy repo rate by 25 basis points to 5.50 per cent, according to the central bank’s Monetary Policy Statement. The committee also changed its stance to “calibrated tightening”.
The MPC held its 63rd meeting from 5 to 7 October under the chairmanship of Governor Sanjay Malhotra. As a result of the decision, the statement said, the standing deposit facility rate stands adjusted at 5.25 per cent, and the marginal standing facility rate and the Bank Rate at 5.75 per cent.
Stance and Dissent
The statement said the change of stance signals that, given current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on evolving conditions and the outlook. It said the duration and extent of the hike cycle would depend on growth-inflation developments, especially underlying inflation, the broadening of price pressures and second-round effects of the supply shock. Two members, Dr Nagesh Kumar and Prof. Ram Singh, were of the view that the stance should be retained at neutral.
Growth and Inflation Projections
The RBI projected real GDP growth for 2026-27 at 7.1 per cent, with 7.2 per cent in the second quarter, 6.9 per cent in the third and 6.8 per cent in the fourth. It cited National Statistics Office estimates showing growth of 7.8 per cent in the first quarter of 2026-27.
On prices, the statement said consumer price inflation rose to 4.8 per cent in August 2026 from 4.5 per cent in July, driven mainly by food and fuel, with core inflation at 4.2 per cent. The RBI projected CPI inflation of 5.2 per cent for 2026-27, with 4.9 per cent in the second quarter, 6.0 per cent in the third and 5.7 per cent in the fourth. It pointed to a deficient south-west monsoon, El Niño conditions and high energy and commodity prices as sources of supply-side pressure.
On the global backdrop, the statement said the re-escalation of the conflict in West Asia and volatility in crude oil prices had kept the global economy in flux, and that the US Federal Reserve hiked by 25 basis points in September. The minutes of the meeting will be published on 21 October, and the next MPC meeting is scheduled for 2 to 4 December.
Why It Matters
The decision shows the central bank judging that inflation and its outlook are less benign than they were a year earlier, even as it describes growth as resilient. The unanimous rate vote alongside a split on the stance suggests broad agreement on acting now but less agreement on how firmly to signal what comes next. Borrowers and savers will watch the December meeting and the incoming inflation data to see whether the next move is another hike or a pause.
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