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RBI MPC Minutes: 25 Bps Rate Hike to 5.50% Unanimous; Stance Shifts to Calibrated Tightening as Q3 CPI Heads to 6%

The Reserve Bank of India (RBI) has published the minutes of the 63rd Monetary Policy Committee (MPC) meeting (held October 5–7, 2026) under Section 45ZL of the RBI Act, 1934.

Economy2 min read

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The detailed disclosures confirm a decisive hawkish recalibration, marked by an across-the-board 25-basis-point hike in the policy repo rate to 5.50% and a policy stance shift to "Calibrated Tightening."

Voting Breakdown and Policy Corridor Adjustment

The central bank realigned the Liquidity Adjustment Facility (LAF) corridor following two distinct votes:

  • Policy Repo Rate (Unanimous 6–0): All six members—Dr. Nagesh Kumar, Shri Saugata Bhattacharya, Prof. Ram Singh, Shri Indranil Bhattacharyya, Deputy Governor Dr. Poonam Gupta, and Governor Shri Sanjay Malhotra—voted to hike the repo rate from 5.25% to 5.50%.
  • SDF and MSF Adjustments: The Standing Deposit Facility (SDF) rate automatically adjusted to 5.25%, while the Marginal Standing Facility (MSF) rate and Bank Rate moved to 5.75%.
  • Stance Dissent (4–2 Majority): The MPC shifted its stance to Calibrated Tightening, carried by a 4–2 majority. External members Dr. Nagesh Kumar and Prof. Ram Singh voted to retain a "Neutral" stance, cautioning against premature policy rigidity amid global trade uncertainties.

The resolution clarified that "Calibrated Tightening" explicitly rules out rate cuts in the near term; subsequent policy moves can only comprise a further hike or an extended pause.

Macro Projections: Higher Growth, Sticky Inflation

The MPC highlighted that domestic economic momentum has decoupled from global slowdowns, warranting preemptive inflation containment:

  • GDP Upgraded to 7.1%: Following a stronger-than-expected 7.8% GDP print in Q1 FY27, full-year growth was raised 40 bps to 7.1% (Q2 at 7.2%, Q3 at 6.9%, Q4 at 6.8%, and Q1 FY28 at 7.1%).
  • CPI Elevated to 5.2%: Headline inflation was revised upward by 20 bps to 5.2% for FY27. Driven by crude volatility from the West Asia conflict and weather-driven food disruptions, Q3 CPI is projected to breach the target and touch the upper tolerance band at 6.0%, followed by 5.7% in Q4 and 5.6% in Q1 FY28.
  • Core Inflation at 4.4%: The diffusion index revealed price hardening, with 37% of CPI basket items registering inflation above 4% in August (up from 20% in March).


Why it matters

Governor Sanjay Malhotra underscored that monetary policy must decisively curtail second-round effects and rising household inflation expectations (+70 bps) before supply shocks become embedded in core pricing behavior.

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Sources

Finsamudra Desk22 Oct 2026, 12:48 pm IST
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