On 7 October 2026, the Reserve Bank of India (RBI) released the Monetary Policy Statement following the 63rd meeting of the Monetary Policy Committee (MPC) held from 5 to 7 October 2026 under the chairmanship of RBI Governor Sanjay Malhotra.
The decision follows the Committee’s assessment of evolving domestic and global macroeconomic and financial conditions.
Key Takeaways:
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The MPC unanimously voted to increase the policy repo rate under the Liquidity Adjustment Facility (LAF) by 25 basis points to 5.50%.
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Consequently, the Standing Deposit Facility (SDF) rate stands adjusted at 5.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate have been increased to 5.75%.
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The MPC decided to change the policy stance to “calibrated tightening”.
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The RBI observed that the Indian economy has remained resilient despite continuing global headwinds, supported by strong private consumption, investment activity and robust exports.
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Real GDP growth for 2026-27 has been projected at 7.1%.
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Quarter-wise GDP growth projections are:
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Q2: 7.2%
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Q3: 6.9%
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Q4: 6.8%
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Real GDP growth for Q1 of 2027-28 has been projected at 7.1%.
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CPI inflation increased to 4.8% in August 2026, up from 4.5% in July 2026.
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The increase in inflation was primarily driven by higher food and fuel prices, while core inflation also showed signs of broadening price pressures.
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The RBI has projected CPI inflation at 5.2% for 2026-27.
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Quarter-wise inflation projections are:
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Q2: 4.9%
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Q3: 6.0%
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Q4: 5.7%
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Inflation for Q1 of 2027-28 is projected at 5.6%, while core inflation is projected at 4.4% for 2026-27.
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The MPC highlighted risks arising from geopolitical tensions, volatility in crude oil prices, deficient monsoon conditions, El Niño-related weather disruptions and tightening global financial conditions.
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The Committee noted that inflationary pressures are no longer as benign as they were last year and that policy recalibration has become necessary.
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Food and fuel inflation have become more broad-based, while signs of price pressures spreading across sectors have begun to emerge.
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The Committee noted that inflation and its outlook are not as benign as last year, with headline CPI expected to average almost 5.8% over the next three quarters, making recalibration of the policy rate imperative.
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Two MPC members, Dr. Nagesh Kumar and Prof. Ram Singh, were of the view that the policy stance should be retained at “neutral”.
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The minutes of the MPC meeting will be published on 21 October 2026, and the next MPC meeting is scheduled from 2 to 4 December 2026.
The MPC said rate cuts are off the table in the near term; further action can be a hike or a pause, depending on the growth-inflation outlook.
Also Read: RBI Keeps Repo Rate Unchanged at 5.25%; Retains Neutral Stance
[Monetary Policy Statement 2026-27, dated 07-10-2026]
