The 7 October 2026 hike is the central bank's first since February 2023 and comes as inflation projections for FY27 are revised upwards.

BulletsIn

• The Monetary Policy Committee unanimously raised the policy repo rate by 25 basis points to 5.50 per cent on 7 October 2026, as announced by Governor Sanjay Malhotra.
• This is the first repo rate increase since February 2023, ending a pause at 5.25 per cent that followed the December 2025 cut.
• The standing deposit facility rate moves to 5.25 per cent, while the marginal standing facility rate and the Bank Rate move to 5.75 per cent.
• The MPC changed its stance from neutral to calibrated tightening, reportedly on a 4-2 vote, signalling that rate cuts are off the table for now.
• Real GDP growth for 2026-27 is projected at 7.1 per cent, up 40 basis points from the earlier forecast.
• CPI inflation for 2026-27 is projected at 5.2 per cent, up from 5.0 per cent, with core inflation projected at 4.4 per cent.
• Quarterly CPI projections are 4.9 per cent for Q2, 6.0 per cent for Q3 and 5.7 per cent for Q4 of 2026-27.
• CPI inflation rose to 4.8 per cent in August 2026 from 4.5 per cent in July.
• The MPC cited a deficient monsoon, strong El Nino conditions and elevated energy and commodity prices as pressures on prices.
• Malhotra said geopolitical tensions, high commodity prices, trade frictions and tighter global financial conditions could weigh on India's growth outlook.
• Q1 of 2026-27 recorded real GDP growth of 7.8 per cent, which analysts say lets the economy absorb a modest tightening.

Tags: RBIMonetaryPolicy, RepoRate, CalibratedTightening