RBI Raises the Repo Rate by 25 bps to 5.50% and Shifts Its Stance to Calibrated Tightening
The Reserve Bank of India's Monetary Policy Committee, meeting from 5 to 7 October 2026, raised the policy repo rate by 25 basis points to 5.50% — its first increase since February 2023 — and changed the stance from 'neutral' to 'calibrated tightening' on a 4-2 vote, the rate decision itself being unanimous. Governor Sanjay Malhotra said recalibration had become an imperative as food price pressures broadened and inflation expectations showed signs of hardening. The RBI lifted its FY27 real GDP growth projection to 7.1% while pegging headline CPI inflation near 5.8% over the next three quarters, taking near-term rate cuts off the table.
RBI was established on 1 April 1935 under the RBI Act, 1934 and nationalised in 1949; headquarters Mumbai | The six-member Monetary Policy Committee was created by the Finance Act, 2016 amending the RBI Act — three RBI members and three government nominees, with the Governor holding a casting vote | The MPC's statutory target is 4% CPI inflation with a tolerance band of plus or minus 2%