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Interest Rates

RBI Raises Policy Repo Rate to 5.50% and Shifts Stance

The Reserve Bank of India has raised the policy repo rate by 25 basis points to 5.50 per cent and changed its monetary policy stance.

AS

Written by Aarav Sharma

Published 10 October 2026·2 min read

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The Monetary Policy Committee of the Reserve Bank of India unanimously voted to increase the policy repo rate by 25 basis points to 5.50 per cent on October 7, 2026. The central bank also shifted its monetary policy stance to calibrated tightening with immediate effect. Corresponding adjustments were made to key standing facility rates across the policy corridor.

Policy Measure Revised 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

Policy Rate Decisions and Stance Shift

The Monetary Policy Committee met from October 5 to October 7, 2026, to assess evolving macroeconomic conditions. Following a detailed assessment, members voted unanimously to hike the policy repo rate under the liquidity adjustment facility to 5.50 per cent. The standing deposit facility rate was set at 5.25 per cent, while the marginal standing facility rate and the Bank Rate were adjusted to 5.75 per cent. The committee adopted a stance of calibrated tightening, indicating that rate cuts are off the table in the near term. Future policy actions will depend on actual growth and inflation developments, particularly underlying inflation and supply shock effects.

Growth and Inflation Projections

The Reserve Bank of India revised its real GDP growth projection for 2026-27 upward by 40 basis points to 7.1 per cent. Quarterly growth projections stand at 7.2 per cent for Q2, 6.9 per cent for Q3, and 6.8 per cent for Q4. Meanwhile, consumer price index inflation is projected at 5.2 per cent for 2026-27, with Q3 inflation expected to peak at 6.0 per cent. Core inflation for the financial year is projected at 4.4 per cent. Elevated energy prices, food price volatility, and global financial conditions continue to influence near-term price outlooks.

Additional Financial Sector Measures

The central bank announced specific measures to enhance financial sector infrastructure and reporting. Inter-operability among NBFC Account Aggregators will be enabled to allow information aggregation through a single platform. Additionally, SEBI-regulated depositories will include deposit account information in their consolidated account statements. Both initiatives will be implemented by December 31, 2026. The regulator is also establishing a Technical Consultative Committee for Financial Markets to engage with market participants on policy matters.

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