Reserve Bank of India announced its October 2026 monetary policy with a clear focus on balancing growth and inflation. The central bank raised the repo rate by 25 basis points to 5.5%, marking the first hike since February 2023. This move signals a shift in stance from neutral to calibrated tightening, aimed at addressing rising price pressures and global uncertainties.
Alongside the rate hike, the RBI revised its inflation estimate upward to 5.2% for the current financial year. The revision reflects concerns over crude oil volatility, supply chain risks, and global inflationary trends. At the same time, the GDP growth forecast was upgraded to 7.1%, supported by strong domestic demand and robust first quarter expansion.
Other policy rates were adjusted accordingly, with the Standing Deposit Facility at 5.25% and the Marginal Standing Facility and Bank Rate at 5.75%. The RBI highlighted external challenges such as tighter global financial conditions and currency pressures, while reaffirming its commitment to maintaining financial stability.
Liquidity absorption through open market operations and reverse repos will continue to ensure orderly market conditions. This policy marks the first repo hike in twenty one meetings and reflects the central bank’s readiness to act decisively against inflation risks while supporting India’s growth momentum.
