Current affairs · October 2026

RBI raises repo rate to 5.50% and changes stance to calibrated tightening

7 Oct 2026 · By the PrepMatic team · 2 min read

The Reserve Bank of India raised the policy repo rate by 25 basis points, from 5.25% to 5.50%, on 7 October 2026. The Monetary Policy Committee (MPC) voted unanimously at its 63rd meeting, held from 5 to 7 October under Governor Sanjay Malhotra, and also changed the stance to calibrated tightening.

Rates after the decision

The MPC said rate cuts are off the table in the near term. The next move can only be a hike or a pause, depending on growth and underlying inflation. Two members, Dr Nagesh Kumar and Prof Ram Singh, preferred to keep the stance neutral.

Why the RBI acted

The MPC pointed to the West Asia conflict and volatile crude prices, a deficient south-west monsoon and El Niño conditions. CPI inflation rose to 4.8% in August 2026 from 4.5% in July, and the committee expects headline inflation to average almost 5.8% over the next three quarters.

Core inflation is projected at 4.4% for the year, and real GDP grew 7.8% in Q1 of 2026-27. The minutes will be published on 21 October 2026, and the next MPC meeting is on 2 to 4 December 2026.

Why it matters for exams

Policy rates, the corridor (SDF, repo, MSF) and the stance are standard banking awareness topics for IBPS, SBI and RBI Grade B. See the banking awareness guide. For TNPSC, expect it under the Indian economy part of general studies.

Practice questions

Question 1

After the MPC meeting of 5 to 7 October 2026, what is the policy repo rate and the stance?

• A. 5.25%, neutral
• B. 5.50%, calibrated tightening
• C. 5.50%, accommodative
• D. 5.75%, calibrated tightening

Question 2

Which two rates stand at 5.75% after this decision?

• A. SDF rate and repo rate
• B. Repo rate and Bank Rate
• C. MSF rate and Bank Rate
• D. SDF rate and MSF rate

Answers

1. B. The repo rate went up 25 bps to 5.50% and the stance became calibrated tightening.
2. C. The MSF rate and the Bank Rate are both 5.75%.

Source

Resolution of the Monetary Policy Committee, 5 to 7 October 2026 (RBI) and the Governor's Statement, 7 October 2026 (RBI).

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