RBI Repo Rate Oct 2026: 5.50% After the October 2026 Hike 

The RBI repo rate today is 5.50%. On 7 October 2026, the Reserve Bank of India’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, voted unanimously to raise it by 25 basis points, or 0.25 percentage points, from 5.25%. It is the first repo rate hike since February 2023.

The committee also changed its policy stance from neutral to “calibrated tightening”. Its resolution says the policy action ahead “can only be a rate hike or a pause”.

What was Held in the MPC Meeting?

The resolution says the policy action ahead “can only be a rate hike or a pause”. All six members voted for the hike. Two of them, Dr Nagesh Kumar and Prof Ram Singh, preferred to keep the stance neutral.

The hike reverses part of the 125 basis points of cuts made in 2025, which took the repo rate from 6.50% to 5.25%. The rate then stayed at 5.25% for four meetings in 2026.

The RBI announced no change to the cash reserve ratio (CRR), the share of deposits that banks must keep with the RBI. It stands at 3.00%.

On liquidity, the Governor’s statement says banks have held an average daily surplus of about ₹5.9 lakh crore since the August meeting. The RBI will use a mix of liquidity tools to keep the overnight call rate close to the repo rate.

The RBI also published its forecasts for each quarter from July 2026 to June 2027.

The resolution also says that “rate cuts are off the table in the near term”. That leaves a pause or another hike as the two outcomes the MPC has pointed to for the December meeting.

The RBI announced two other measures.

By 31 December 2026, depositories will be able to show bank deposit accounts in the consolidated account statement (CAS) that demat account holders receive through account aggregators.

The RBI will also set up a Technical Consultative Committee for Financial Markets. Both are in its Statement on Developmental and Regulatory Policies.

Why did the RBI Raise the Repo Rate?

The RBI raised the repo rate because inflation is rising faster than it expected while growth remains strong. The Government of India sets the RBI’s target: consumer price (CPI) inflation of 4%, with a tolerance band of 2% to 6%. In March 2026, it kept that target for the five years to March 2031.

• Inflation is climbing. According to the RBI’s resolution, CPI inflation reached 4.8% in August 2026, up from 4.5% in July. The RBI now expects it to average 6.0% in October to December 2026, the top of its tolerance band, and almost 5.8% across the three quarters from October 2026 to June 2027.
• Price rises are spreading. According to the Governor’s statement, core inflation, which leaves out food and fuel, rose to 4.2% in August after three months at 3.9%. The RBI projects it at 4.4% for 2026-27.
• Crude oil is expensive and volatile. The Governor’s statement notes that India’s crude basket averaged about $116 a barrel in September, up from $82 in July. The Governor linked the rise to a sudden re-escalation of the West Asia conflict in September. India imports most of its crude oil, so higher prices feed into fuel and transport costs.
• Food prices are at risk. The southwest monsoon ended 13% below its long-period average. The Governor said the weak monsoon and strong El Niño conditions may affect the coming rabi (winter crop) season. El Niño is a Pacific weather pattern that often weakens India’s monsoon.
• The exchange rate matters too. A weaker rupee makes imports costlier. The Governor said the RBI remains committed to orderly exchange-rate adjustments.
• Growth can absorb a hike. The resolution puts growth at 7.8% in April to June 2026, and the RBI raised its 2026-27 growth forecast to 7.1%. The MPC noted that the “economic momentum remains broad-based”.

What is the Repo Rate?

The repo rate is the interest rate at which the RBI lends short-term money to commercial banks against government securities. It is the RBI’s main tool for controlling inflation.

When the repo rate rises, banks pay more to borrow and pass the cost on through higher loan rates. Costlier credit slows spending, which eases pressure on prices. When the repo rate falls, the opposite happens.

The repo rate sits in the middle of a corridor formed by two other rates.

• Marginal standing facility (MSF), the ceiling. Banks borrow overnight from the RBI at this rate when they are short of funds.
• Repo rate, the policy rate. Banks borrow from the RBI at this rate against government securities.
• Standing deposit facility (SDF), the floor. Banks earn this rate when they park surplus money with the RBI, without collateral.

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RBI Repo Rate History, 2023 to 2026

The RBI held the repo rate at 6.50% for two years after February 2023, cut it four times in 2025, and then paused for ten months before the October 2026 hike.

When is the Next RBI MPC Meeting?

The next RBI MPC meeting is scheduled for 2 to 4 December 2026, with the decision due on 4 December, usually at 10 am. The minutes of the October meeting will be published on 21 October 2026.

Four things will shape the December decision:

• Inflation data. The CPI figures for September and October 2026 will show whether inflation is tracking the RBI’s 6.0% forecast for the December quarter.
• Crude oil. Prices rose sharply in September, which the Governor linked to the West Asia conflict.
• The rupee. A weaker rupee would add to the cost of imports.
• Rabi sowing. A weak winter crop would keep food prices high.

The RBI has not committed to another hike. It has said only that the policy action ahead can be a hike or a pause.

Repo Rate Oct 2026 : FAQs

Source: RBI