RBI raises repo rate by 25 bps to 5.50%, changes stance to calibrated tightening; SDF 5.25%, MSF and Bank Rate 5.75% with immediate effect
The Monetary Policy Committee, at its 63rd meeting on 5–7 October 2026, voted unanimously to increase the policy repo rate by 25 basis points to 5.50 per cent and changed the stance to calibrated tightening. The SDF rate stands at 5.25 per cent and the MSF rate and Bank Rate at 5.75 per cent, all with immediate effect. RBI projects real GDP growth of 7.1 per cent and CPI inflation of 5.2 per cent for 2026-27.
Key facts
- In force
- Rates revised with immediate effect from 7 October 2026
- Who it affects
- Banks, LAF participants, primary dealers, borrowers and depositors, NBFC-Account Aggregators, SEBI-regulated depositories
- What it is
- Rule change
- Section
- FEMA & RBI
- Published
- 7 October 2026
In 30 seconds
- Policy repo rate raised by 25 basis points from 5.25 per cent to 5.50 per cent with immediate effect; the vote on the rate was unanimous.
- Standing deposit facility (SDF) rate 5.25 per cent; marginal standing facility (MSF) rate and Bank Rate 5.75 per cent.
- Stance changed to calibrated tightening. Two members, Dr. Nagesh Kumar and Prof. Ram Singh, were of the view that the stance be retained at neutral.
- Real GDP growth for 2026-27 projected at 7.1 per cent; CPI inflation at 5.2 per cent, with Q3 at 6.0 per cent and Q4 at 5.7 per cent.
- Penal interest on CRR and SLR shortfalls, linked to the Bank Rate, moves to 8.75 per cent or 10.75 per cent depending on the duration of the shortfall.
- Minutes will be published on 21 October 2026; the next MPC meeting is scheduled for 2 to 4 December 2026.
हिंदी में सार
मौद्रिक नीति समिति ने 5–7 अक्टूबर 2026 की बैठक में सर्वसम्मति से रेपो दर 25 आधार अंक बढ़ाकर 5.50 प्रतिशत कर दी और रुख बदलकर “कैलिब्रेटेड टाइटनिंग” कर दिया। SDF दर 5.25 प्रतिशत तथा MSF दर और बैंक दर 5.75 प्रतिशत हो गई हैं; ये दरें 7 अक्टूबर 2026 से तुरंत लागू हैं। 2026-27 के लिए वास्तविक GDP वृद्धि 7.1 प्रतिशत और CPI मुद्रास्फीति 5.2 प्रतिशत रहने का अनुमान है। अगली बैठक 2 से 4 दिसंबर 2026 को होगी।
Before and now
5.25 per cent
5.50 per cent, with immediate effect from 7 October 2026
What the MPC decided
The Monetary Policy Committee (MPC) held its 63rd meeting from 5 to 7 October 2026 under the chairmanship of Governor Shri Sanjay Malhotra. According to the resolution released on 7 October 2026, the MPC voted unanimously to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.50 per cent. It also decided to change the stance to calibrated tightening.
Two members — Dr. Nagesh Kumar and Prof. Ram Singh — were of the view that the stance be retained at neutral.
The rates now
| Rate | Level from 7 October 2026 |
|---|---|
| Policy repo rate | 5.50 per cent (raised from 5.25 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 (revised from 5.50 per cent) |
RBI issued three circulars the same day to give effect to the decision. The LAF circular (RBI/2026-27/282) states that all other terms and conditions of the extant LAF Scheme remain unchanged. The Standing Liquidity Facility for Primary Dealers is available at the revised repo rate of 5.50 per cent (RBI/2026-27/281). The Bank Rate circular (RBI/2026-27/283) revises the penal interest on shortfalls in CRR and SLR requirements to Bank Rate plus 3.0 percentage points (8.75 per cent) or Bank Rate plus 5.0 percentage points (10.75 per cent), depending on the duration of the shortfall; the existing rates were 8.50 per cent and 10.50 per cent.
What the stance means, in the MPC’s words
The resolution says the change in stance signals that, given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook. The duration and extent of the rate hike cycle would be contingent on actual growth-inflation developments and the outlook, especially that of underlying inflation, the extent of broadening of price pressures and second round effects of the supply shock, and the impact of demand impulses.
Growth and inflation projections
| Period | Real GDP growth | CPI inflation |
|---|---|---|
| 2026-27 | 7.1 per cent | 5.2 per cent |
| Q2:2026-27 | 7.2 per cent | 4.9 per cent |
| Q3:2026-27 | 6.9 per cent | 6.0 per cent |
| Q4:2026-27 | 6.8 per cent | 5.7 per cent |
| Q1:2027-28 | 7.1 per cent | 5.6 per cent |
Risks to both projections are stated to be evenly balanced. Core inflation is projected at 4.4 per cent for 2026-27. The Governor’s statement describes the growth forecast for 2026-27 as an upward revision of 40 basis points.
The resolution records that real GDP grew 7.8 per cent in Q1:2026-27 and that CPI inflation rose to 4.8 per cent in August 2026 from 4.5 per cent in July, with core inflation at 4.2 per cent. The MPC noted that headline CPI inflation is expected to average almost 5.8 per cent in the next three quarters and that, in this milieu, recalibrating the policy rate is imperative. It cited the deficient monsoon, ongoing El Niño conditions and high energy and other commodity prices as sources of supply-side pressure.
Liquidity
The Governor’s statement says the Reserve Bank will use an appropriate mix of liquidity management tools and strive to align the weighted average call rate with the policy repo rate.
Two additional measures
- Account Aggregators: interoperability among NBFC-Account Aggregators will be implemented, so that customers can access and share their financial information across Financial Information Providers through any NBFC-AA of their choice. SEBI-regulated depositories are being facilitated to include bank deposit account information in the Consolidated Account Statement (CAS) through NBFC-AAs. Both measures are expected to be implemented by 31 December 2026.
- Technical Consultative Committee for Financial Markets: RBI will constitute the Committee as a forum for structured engagement with market participants and stakeholders on money, government securities and foreign exchange markets, and the respective derivative markets and infrastructure. Its composition and terms of reference will be notified separately.
What comes next
The minutes of the meeting will be published on 21 October 2026. The next meeting of the MPC is scheduled for 2 to 4 December 2026.
Questions and answers
What is the repo rate after the October 2026 policy?
The policy repo rate is 5.50 per cent. The MPC raised it by 25 basis points from 5.25 per cent with immediate effect on 7 October 2026.
What are the SDF, MSF and Bank Rate now?
The standing deposit facility (SDF) rate is 5.25 per cent. The marginal standing facility (MSF) rate and the Bank Rate are 5.75 per cent. The Bank Rate was revised upwards from 5.50 per cent.
Was the decision unanimous?
The vote to increase the repo rate was unanimous. On the stance, the MPC decided to change it to calibrated tightening, but two members, Dr. Nagesh Kumar and Prof. Ram Singh, were of the view that it be retained at neutral.
What does calibrated tightening mean?
The resolution says it signals that, given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook.
When is the next MPC meeting?
The next meeting is scheduled for 2 to 4 December 2026. The minutes of the October meeting will be published on 21 October 2026.
Published 7 October 2026. Updated 12 October 2026. This report is for general information and is not professional advice. Read the source document before acting on it.