More Stories

Informist, Wednesday, Oct. 7, 2026

 

Please click here to read all liners published on this story

--RBI Malhotra: MPC voted to hike repo rate by 25 bps to 5.50%
--RBI Malhotra: MPC voted unanimously to hike repo rate
--RBI Malhotra: SDF rate adjusted to 5.25%
--RBI Malhotra: MSF, Bank rate adjusted to 5.75%
--RBI Malhotra: MPC changed policy stance to 'calibrated tightening'
--RBI Malhotra: 4 MPC members in favour of  calibrated tightening' stance
--RBI Malhotra: 2 MPC members not in favour of  calibrated tightening' stance
--RBI Malhotra: Rise in crude heightened global fincl mkt volatility
--RBI Malhotra: Re-escalation of West Asia conflict soured global econ sentiment
--RBI Malhotra: Global inflation to increase sharply

 

NEW DELHI – The Reserve Bank of India's Monetary Policy Committee Wednesday raised the policy repo rate for the first time in over three years by 25 basis points to 5.50%. "After a detailed assessment of the evolving macroeconomic and financial conditions, developments, and the outlook, the MPC voted unanimously to increase the policy repo rate under the LAF (Liquidity Adjustment Facility) by 25 bps to 5.5%," said Governor Sanjay Malhotra. He said "Consequently, the Standing Deposit Facility rate stands adjusted at 5.25%. And the Marginal Standing Facility rate, and the bank rate to 5.75%."

 

"The MPC also decided to change the stance, to calibrated tightening by a majority of 4-2," Malhotra said. The MPC noted that the global context on account of geopolitical developments remains challenging. Nevertheless, the Indian economy has been strong, and the economic momentum remains broad based, he added. 

 

Malhotra said volatility in global crude prices has heightened financial market volatility. "Although global growth remains resilient, it is projected to decelerate this year with respect to the previous year. Driven by escalating energy costs and rising food prices, global inflation is projected to increase sharply, prompting monetary policy tightening by major central banks across the world," Malhotra said.

 

The rate-setting panel's decision was on expected lines. Fifteen of the 19 economists and market participants polled by Informist had expected the committee to hike the repo rate as inflation has risen amid pressures from the war in West Asia. The panel had lowered the repo rate by a cumulative 125 basis points in 2025, the most in a calendar year since 2019. It had last raised interest rates in February 2023.

 

Malhotra said, "In light of the available data that it is clear that inflation and its outlook are not benign as they were last year. With headline CPI inflation expected to average almost 5.8% in the next three quarters including this and core inflation projected at 4.4% for this financial year."

 

In August, the MPC had left the repo rate unchanged, saying the impact of supply-side disruptions had not yet spilled over meaningfully into the wider CPI inflation basket. India's retail inflation rose to a 20-month high of 4.82% in August, driven by higher food, transport, and restaurant services costs amid the ongoing war in West Asia.

 

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 output, the governor said. "The duration and extent of the rate hike cycle, therefore, would be contingent on the actual growth, inflation, developments and outcomes, especially that of underlying inflation, extent of broadening of price pressures and second-round effects of the supply-side pressures, as well as the impact of the demand in passing," Malhotra said.

 

Price pressures are increasingly becoming visible across a range of commodities due to the deficient South-West monsoon conditions and high volatility in international oil prices. "In addition, early signs of inflation becoming generalised are also evident from the increase in core inflation and higher inflation across a larger segment of the CPI basket," Malhotra said. The RBI raised the headline inflation outlook for 2026-27 (Apr-Mar) by 20 bps to 5.2%.

 

On India's growth potential, Malhotra said domestic economic activity exhibited resilience amid global headwinds, which is evident from GDP growth of 7.8% in Apr-Jun. "Coming to high frequency indicators for Q2, they all suggest that economic activity is holding momentum in Q2, albeit with some moderation compared to the preceding quarter," he said. Weak South-West monsoon along with strong El-Nino conditions may impact the upcoming Rabi season, while the resilient non-farm activity may continue to support rural consumption, Malhotra added. The RBI Wednesday raised its outlook for India's GDP growth for FY27 by 40 bps to 7.1%.  End

 

US$1 = INR 96.53

 

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.