RBI Holds Repo at 5.50 Percent, Trims FY26 CPI Outlook to 2.6 Percent, Pegs GDP at 6.8 Percent
By Shishta Dutta | Updated at: Oct 1, 2025 11:00 AM IST
Mumbai, October 1, 2025 – Reserve Bank of India Monetary Policy Committee left the policy repo rate unchanged at 5.50 percent with a neutral bias and forecasted real GDP growth at 6.8 percent in FY26 and headline CPI inflation at 2.6 percent in the year. The standing deposit facility is 5.25 percent and marginal standing facility and Bank Rate at 5.75 percent. It was consensual on rates but two members were inclined to a change in stance to accommodative.
Key Policy Decisions and Stance
MPC concluded its 57th meeting on September 29 to October 1, 2025 and resolved to standstill, citing a superior trajectory of inflation and resilient domestic drivers of expansion against increased external uncertainties. Minutes will be released on October 15, 2025, and the following meeting is from December 3 to 5, 2025.
What Changed and What Stayed the Same
| Metric | Previous | Current | Outcome |
|---|---|---|---|
| Repo Rate | 5.50% | 5.50% | Unchanged |
| SDF | 5.25% | 5.25% | Unchanged |
| MSF | 5.75% | 5.75% | Unchanged |
| Bank Rate | 5.75% | 5.75% | Unchanged |
| Policy Stance | Neutral | Neutral | Retained |
Source: MPC Resolution
Growth and Inflation Forecast
RBI forecasts FY26 real GDP growth at 6.8 percent, Q2 at 7.0 percent, Q3 at 6.4 percent, and Q4 at 6.2 percent. In Q1 FY27, 6.4 percent is forecast. On the inflation side, the central bank now places FY26 CPI at 2.6 percent, with softer food prices and also GST rate rationalisation effects, with quarter-on-quarter prints at 1.8 percent in both Q2 and Q3 and 4.0 percent in Q4. CPI for Q1 FY27 is estimated at 4.5 percent.
Quarterly Projections
| Projection | Q2 FY26 | Q3 FY26 | Q4 FY26 | Q1 FY27 |
|---|---|---|---|---|
| Real GDP Growth | 7.0% | 6.4% | 6.2% | 6.4% |
| CPI Inflation | 1.8% | 1.8% | 4.0% | 4.5% |
Source: MPC Resolution
Rationale
RBI noted a sharp moderation of headline inflation to multi-year lows hitherto in FY26 on account of the fall in food prices and contained core inflation. In the domestic economy, even as domestic demand remains resilient, the MPC noted uncertainties around tariff and trade policies, global volatility, and geopolitics as growth risks in H2 FY26. As front-loading of easing has already been done and recent fiscal measures continuing their impact, the Committee deemed it advisable to look at new data before altering policy direction.
Domestic Macro Snapshot
Real GDP increased 7.8 percent in Q1 FY26 with private consumption and investment driving it, while GVA expanded 7.6 percent as manufacturing picked up and services were stable. Rural demand is fueled by good monsoon and good kharif sowing, while urban demand is on the incline of improvement. Investment leads like cement output and steel usage are favorable.
Key Dates
- MPC minutes: October 15, 2025
- Next MPC meeting: December 3 to 5, 2025
REF: https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR1216AA76708ADDD44FCFB57ABA32DC5BBEE0.PDF
Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.
If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.
Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations
