RBI Monetary Policy Update – October 1, 2025
The Reserve Bank of India’s Monetary Policy Committee (MPC) met today and delivered a status-quo policy while striking a cautiously optimistic tone on growth and inflation. The repo rate was left unchanged at 5.5% and the stance remained neutral, reflecting a balance between supporting growth and keeping inflation under check.
Key Highlights from the MPC
1. Policy Rates & Stance
- Repo Rate: 5.5% (unchanged)
- MSF (Marginal Standing Facility) / Bank Rate: 5.75%
- Standing Deposit Facility (SDF): 5.25%
- Policy Stance: Neutral – keeping flexibility to respond to changing conditions.
2. Growth & Inflation Outlook
- GDP Growth Forecast for FY26: Revised upward to 6.8% (from 6.5%), driven by strong consumption, capex momentum, and resilient services.
- CPI Inflation Forecast for FY26: Cut to 2.6% (from 3.1%) – India’s lowest in years, reflecting easing food inflation and GST slab rationalization.
- Q1 FY26 GDP Growth: Strong 7.8%, the fastest pace in 7 quarters.
- Current Account Deficit: Narrowed to 0.2% of GDP, aided by robust services exports and steady remittances.
3. Additional Policy Measures
- CRR & SLR: No changes this time.
- Banking Reforms:
- Draft guidelines under the Basel framework (Standardized Approach for Credit Risk).
- Greater flexibility for banks in funding acquisitions.
- Relaxed norms for loans against shares.
- Rupee Internationalization: New measures to promote INR-denominated cross-border lending by Indian banks to Nepal, Bhutan, and Sri Lanka.
4. Market Reaction
- Equity markets cheered the announcement, with Sensex and Nifty moving higher as the dovish pause signaled stability and potential room for future easing.
- Bond yields softened slightly, reflecting optimism on the inflation trajectory.
- The overall sentiment: “Thumbs up” from investors, thanks to the growth upgrade and inflation comfort.
Quick Snapshot
| Indicator | Latest Value | Change / Outlook |
|---|---|---|
| Repo Rate | 5.5% | Unchanged – Neutral stance |
| GDP Growth FY26 | 6.8% | Upgraded from 6.5% |
| CPI Inflation FY26 | 2.6% | Lowered from 3.1% |
| MSF / Bank Rate | 5.75% | Unchanged |
| SDF | 5.25% | Unchanged |
| Q1 FY26 GDP Growth | 7.8% | Fastest in 7 quarters |
| Current Account Deficit | 0.2% of GDP | Significantly improved |
WynWealth Take
The RBI’s “dovish pause” is positive for investors. With growth showing strength and inflation easing, liquidity conditions should remain stable for at least the next two months. If global uncertainties or domestic headwinds emerge, the door for a rate cut later this fiscal remains open.
For now, all eyes will be on:
- Festival demand trends
- Progress on GST reforms
- Global tariff policies and commodity prices
This policy keeps India on a steady course — balancing resilience with readiness.
