On 7 October 2026 the RBI's Monetary Policy Committee raised the repo rate by 25 basis points to 5.50% and changed its stance to calibrated tightening, the first hike since February 2023.
WHAT HAPPENED
The Monetary Policy Committee (MPC) of the Reserve Bank of India met from 5 to 7 October 2026 under Governor Sanjay Malhotra. It raised the policy repo rate by 25 basis points, from 5.25% to 5.50%. This is the first rate increase since February 2023. The committee also changed its stance from "neutral" to "calibrated tightening".
THE NEW RATES
- Policy repo rate: 5.50%.
- Standing Deposit Facility (SDF) rate: 5.25% (repo minus 25 bps).
- Marginal Standing Facility (MSF) rate and Bank Rate: 5.75% (repo plus 25 bps).
THE VOTE
All six members voted for the rate increase. Four members voted to change the stance; two external members, Prof. Ram Singh and Dr. Nagesh Kumar, preferred to keep it neutral.
WHY THE RBI ACTED
Retail (CPI) inflation rose to 4.82% in August 2026 from 4.45% in July, and press reports pointed to high crude oil prices and a weak rupee. The Governor ruled out cuts for now: from here the RBI will either raise rates again or hold them, depending on how growth and inflation turn out.
WHAT IT MEANS FOR BORROWERS
Loans linked to the repo rate (external benchmark lending rate, EBLR) become dearer, so home and vehicle loan EMIs can rise after the next reset date.
EXAM ANGLE
- Repo rate is the rate at which the RBI lends to banks against government securities; reverse repo has been replaced in practice by the SDF as the floor of the corridor.
- The LAF corridor runs from SDF (floor) to MSF (ceiling), with the repo in the middle.
- The MPC has six members (three from the RBI including the Governor, three external) and the Governor has the casting vote. The inflation target is 4% with a tolerance band of 2% on either side, set under the RBI Act, 1934 (as amended in 2016).
- "Calibrated tightening" means the RBI may raise rates in measured steps; it is different from "withdrawal of accommodation" and from a neutral stance.
Published on 7 Oct 2026. Based on press reports of the RBI policy announcement (Business Standard, Forbes India). Confirm exact figures from the RBI press release at rbi.org.in before an exam.