RBI Governor Sanjay Malhotra announced a 25‑basis‑point hike, lifting the repo rate to 5.5% during the MPC meeting on Wednesday, 10 October 2026. The decision came hours after the U.S. Federal Reserve’s 25‑basis‑point increase, as global inflationary pressures tighten liquidity worldwide.
The committee cited persistent supply‑side inflation, a weak Southwest monsoon, El Niño‑driven drought, and volatile oil prices as drivers of the higher CPI projections—5.8% over the next three quarters for headline CPI and 4.4% for core inflation.
Despite the external shocks, India’s growth trajectory remains strong; the RBI has nudged its GDP growth forecast for FY 2026‑27 up to 7.1% from 6.7%. This confidence stems from robust domestic demand and resilient manufacturing output.
In its statement, the MPC underscored that rate cuts are off the table in the near term and that any future policy move will hinge on evolving inflation and growth data. The committee’s stance is now one of calibrated tightening.
The next MPC meeting, slated for late November 2026, will determine whether the RBI will maintain the 5.5% rate or implement a further hike, depending on how the supply‑side pressures evolve.
Market analysts expect the decision to influence borrowing costs across banks, with potential ripple effects on mortgage rates and consumer loans.
For now, the RBI’s focus remains on containing inflation without stifling the country’s economic momentum.