Repo rate rises 25 basis points to 5.50 percent
At its October 5–7, 2026 meeting, the Reserve Bank of India (RBI) unanimously raised the repo rate by 25 basis points to 5.50 percent. Minutes published October 21 show disagreement over adopting calibrated tightening.
Six back the increase
Governor Sanjay Malhotra, Nagesh Kumar, Saugata Bhattacharya, Ram Singh, Indranil Bhattacharyya and Poonam Gupta all supported the rate increase.
The standing deposit facility rate became 5.25 percent; the marginal standing facility rate and Bank Rate became 5.75 percent.
Kumar and Singh opposed replacing the neutral stance with calibrated tightening, citing uncertainty and risks to growth from prolonged tightening.
The adopted stance excludes near-term cuts but permits increases or pauses, depending on growth, underlying inflation, broader price pressures and second-round effects.
The MPC cited resilient activity and rising inflation, while noting limited evidence of demand pressures and entrenched supply shocks.
Inflation approaches the tolerance ceiling
August CPI inflation rose to 4.8 percent from July's 4.5 percent; core inflation reached 4.2 percent.
The RBI projects 2026–27 inflation at 5.2 percent: Q2 4.9, Q3 6.0 and Q4 5.7 percent, followed by 5.6 percent in Q1 2027–28. Core inflation is forecast at 4.4 percent.
GDP grew 7.8 percent in Q1; full-year growth is projected at 7.1 percent, up from 6.7 percent, with Q2 at 7.2, Q3 at 6.9 and Q4 at 6.8 percent.
Q1 2027–28 growth is projected at 7.1 percent.
West Asia conflict, oil prices, deficient monsoon rainfall and El Niño underpin supply risks.
Agreement stops at the rate
The unanimous increase does not mean agreement on the policy path.
Kumar and Singh supported action on inflation but resisted a stance that excludes near-term cuts.
The committee's distinction between indirect supply costs and second-round effects leaves inflation diffusion and pricing behavior central to subsequent decisions.