RBI raises repo rate to 5.5% from 5.25%, the rate at which banks borrow from it
The Monetary Policy Committee voted unanimously on 7 October 2026 to raise the repo rate by 25 basis points to 5.50% and changed its stance to calibrated tightening. The release also raises the FY27 growth projection to 7.1% and the inflation projection to 5.2%.
The Reserve Bank of India (RBI) raised its policy repo rate by 25 basis points to 5.50% from 5.25% on 7 October 2026. The repo rate is the interest rate at which banks borrow money from the RBI for short periods against government securities. A basis point is one-hundredth of a percentage point, so 25 basis points is 0.25 percentage points.
The decision was taken by the RBI’s Monetary Policy Committee (MPC) at its 5-7 October 2026 meeting. The RBI’s release says the rate change was effective 7 October 2026.
Key rates
| Rate | Before | Now |
|---|---|---|
| Policy repo rate | 5.25% | 5.50% |
| Standing deposit facility (SDF) rate, at which banks park surplus funds with the RBI | 5.00% | 5.25% |
| Marginal standing facility (MSF) rate, at which banks borrow extra overnight funds from the RBI | 5.50% | 5.75% |
| Bank Rate | 5.50% | 5.75% |
The “before” levels are the ones stated in the RBI’s August 2026 policy release.
Vote and stance
All MPC members voted to raise the repo rate. The committee also changed its policy stance, which is its stated direction for policy, to “calibrated tightening” from “neutral”. Two members, Dr. Nagesh Kumar and Prof. Ram Singh, voted to keep the stance at neutral. The RBI release said the stance means rate cuts are off the table in the near term.
Inflation and growth projections for 2026-27
| Metric | Q2 | Q3 | Q4 | Full year |
|---|---|---|---|---|
| Real GDP growth | 7.2% | 6.9% | 6.8% | 7.1% |
| CPI inflation (consumer price inflation) | 4.9% | 6.0% | 5.7% | 5.2% |
The RBI projects GDP growth of 7.1% in Q1 of 2027-28 and CPI inflation of 5.6% for that quarter. Core inflation, which leaves out food and fuel, is projected at 4.4% for 2026-27. The August 2026 release had projected full-year growth of 6.7% and CPI inflation of 5.0%.
The Governor’s statement said inflation and its outlook are not as benign as they were last year, with headline CPI inflation expected to average almost 5.8% over the next three quarters.
What happens next
The MPC’s next meeting is scheduled for 2-4 December 2026, and the minutes of this meeting are due on 21 October 2026.
Basis of these figures
Rates, the vote, the stance, the projections and the dates are as stated in the RBI’s Monetary Policy Statement press release and Governor’s statement of 7 October 2026. The repo-rate hike to 5.5% and the unanimous vote on it were also reported by Business Today on the same day. Previous rate levels and projections are from the August 2026 release. This article does not state what any bank will do with its own loan or deposit rates.