RBI raises repo rate by 25 bps to 5.50% and shifts stance to calibrated tightening
The RBI's Monetary Policy Committee raised the repo rate by 25 bps to 5.50% and shifted its stance to calibrated tightening amid rising inflation pressures.
Growth Brief DeskPublished 2 min read
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Key facts
- The RBI Monetary Policy Committee raised the repo rate by 25 bps to 5.50 per cent.
- The central bank shifted its policy stance from neutral to calibrated tightening.
- Real GDP growth for 2026-27 is projected at 7.1 per cent by the MPC.
- CPI inflation for 2026-27 is projected at 5.2 per cent amid supply-side pressures.
According to the Reserve Bank of India, the Monetary Policy Committee voted unanimously to increase the policy repo rate by 25 basis points to 5.50 per cent during its October 2026 meeting. The standing deposit facility rate was adjusted to 5.25 per cent, while the marginal standing facility rate and Bank Rate moved to 5.75 per cent.
The panel also shifted its monetary policy stance to calibrated tightening, signaling that near-term rate cuts are off the table. The decision follows an upward revision of the consumer price inflation forecast to 5.2 per cent for 2026-27, driven by supply-side pressures and rising food and fuel prices.
Despite persistent global headwinds and geopolitical tensions, the Indian economy remains resilient, with real GDP growth for 2026-27 projected at 7.1 per cent. The next MPC meeting is scheduled for December 2 to 4, 2026.
Why it matters
The Reserve Bank of India's decision to increase the repo rate by 25 basis points to 5.50 per cent directly impacts borrowers by increasing the cost of loans and EMIs across banks. Businesses and retail consumers face tighter financial conditions as the central bank shifts its stance to calibrated tightening to combat rising inflation, signaling that further rate cuts are unlikely in the near term. Investors in fixed income and equity markets must factor in higher borrowing costs and elevated inflation projections averaging 5.2 per cent for the fiscal year.
- Economy
- RBI
- Regulatory Policy
Sources
Source: Reserve Bank of India