RBI Monetary Policy: Repo rate remains unchanged at 5.5%; FY26 GDP growth forecast raised to 6.8%

RBI Monetary Policy: RBI Governor Sanjay Malhotra kept the repo rate unchanged at 5.5 per cent and maintained the policy stance as "neutral" on Wednesday, October 1. This marks the second consecutive pause following three consecutive rate cuts worth 100 basis points across February, April and June.

The RBI Governor said that the central bank's Monetary Policy Committee (MPC) unanimously decided to keep the repo rate unchanged at 5.5 per cent and the policy stance unchanged at neutral.

In August policy also RBI Governor Sanjay Malhotra had kept the repo rate unchanged at 5.5 per cent and maintained the policy stance as "neutral."

The standing deposit facility (SDF) rate under the liquidity adjustment facility (LAF) remains unchanged at 5.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 5.75 per cent.

“Growth-inflation dynamics have shifted since the August monetary policy. Rationalisation of GST is expected to have a dampening effect on inflation. Higher tariffs are likely to moderate export growth,” said RBI Governor Sanjay Malhotra.

Inflation

“The overall inflation outlook has turned notably more benign in recent months, with headline inflation being revised down from 3.7% in June to 3.1% in August, and further to 2.6% most recently. Core inflation stood at 4.2%, indicating that underlying price pressures remain largely contained,” said RBI Governor Sanjay Malhotra.

The RBI revised the average headline inflation for financial year 2026 lower to 2.6% from 3.1% projected earlier.

GDP Growth

RBI Governor Sanjay Malhotra announced that the Real GDP growth estimate for FY26 has been revised upward to 6.8 percent from the earlier projection of 6.5 percent, citing stronger-than-expected economic performance.

For the second quarter, the growth outlook has been raised to 7 percent from 6.7 percent, while projections for the third and fourth quarters have been marginally reduced to 6.4 percent from 6.6 percent and 6.2 percent from 6.3 percent, respectively. Looking ahead, the growth estimate for the first quarter of FY27 has also been moderated to a range of 6.4 percent–6.6 percent.