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Interest Rates

RBI Raises Repo Rate to 5.50 Per Cent in Policy Stance Shift

The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent and adopted a stance of calibrated tightening.

PN

Written by Priya Nair

Published 11 October 2026·2 min read

On this page4 sections
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The Monetary Policy Committee of the Reserve Bank of India increased the policy repo rate by 25 basis points to 5.50 per cent on October 7, 2026. The committee also changed its monetary policy stance to calibrated tightening. The Reserve Bank of India published these decisions in the Governor’s Statement, October 7, 2026.

Key Policy Parameter Adjusted Rate
Policy Repo Rate 5.50 per cent
Standing Deposit Facility (SDF) Rate 5.25 per cent
Marginal Standing Facility (MSF) Rate 5.75 per cent
Bank Rate 5.75 per cent

Rationale Behind Policy Rates and Stance

The Monetary Policy Committee observed that the inflation outlook remains challenging due to geopolitical tensions and rising energy costs. Headline CPI inflation is expected to average almost 5.8 per cent over the next three quarters. Core inflation is projected at 4.4 per cent for the 2026-27 financial year. Due to these price risks, rate cuts are off the table in the near term. Future policy actions will strictly involve a rate hike or a pause based on evolving macroeconomic conditions.

Projections for Economic Growth and Inflation

The Reserve Bank of India revised real GDP growth for 2026-27 upward to 7.1 per cent. Real GDP growth reached 7.8 per cent in the first quarter of 2026-27. Quarterly real GDP projections stand at 7.2 per cent for the second quarter, 6.9 per cent for the third quarter, and 6.8 per cent for the fourth quarter. Real GDP growth for the first quarter of 2027-28 is projected at 7.1 per cent. CPI inflation for 2026-27 is projected at 5.2 per cent. Quarterly CPI inflation estimates stand at 4.9 per cent for the second quarter, 6.0 per cent for the third quarter, and 5.7 per cent for the fourth quarter. CPI inflation for the first quarter of 2027-28 is projected at 5.6 per cent.

Liquidity, External Sector and Additional Measures

System liquidity recorded an average daily surplus of ₹5.9 lakh crore since the August 2026 monetary policy meeting. On the external front, net foreign direct investment inflows reached US$ 13.8 billion during April-August 2026, up from US$ 9.6 billion a year ago. Foreign portfolio investment recorded net outflows of US$ 10.3 billion during April-October 5, 2026. The central bank also announced two financial infrastructure measures:

  • Inter-operability among NBFC Account Aggregators will be enabled by December 31, 2026.
  • SEBI regulated depositories will include deposit account information in consolidated account statements by December 31, 2026.
  • A Technical Consultative Committee for Financial Markets will be constituted to engage market participants on operational matters.

Sources

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