The Monetary Policy Committee (MPC), after a detailed assessment of the evolving macroeconomic conditions and the outlook, voted unanimously to keep the policy repo rate unchanged at 5.50%.
Consequently, the standing deposit facility (SDF) rate remains at 5.25% while the marginal standing facility (MSF) rate and the Bank Rate remain at 5.75%.
RBI MPC meeting updates on October 1, 2025
The MPC also decided to continue with the neutral stance.
”The MPC observed that the overall inflation outlook has turned even more benign in the last few months, due to a sharp decline in food prices and the rationalisation of GST rates. The average headline inflation for 2025-26 has been revised lower from 3.7% projected in June and 3.1% in August, to 2.6%,” Reserve Bank of India (RBI) governor Sanjay Malhotra said in the Governor’s statement.
”Headline inflation for Q4:2025-26 and Q1:2026-27 too have been revised downwards and are broadly aligned with the target, despite unfavourable base effects. Core inflation for this year and Q1:2026-27 is also expected to remain contained,” he said.
”The MPC also noted that the growth outlook remains resilient, supported by domestic drivers, despite weak external demand. It is likely to get further support from a favourable monsoon, lower inflation, monetary easing and the salubrious impact of recent GST reforms. However, growth continues to be below our aspirations,” he said.
“Even though the growth projection for the current financial year is being revised upwards, the forward-looking projections for Q3 and beyond are expected to be slightly lower than projected earlier, primarily due to trade-related headwinds, despite being partially offset by the impetus provided by the rationalisation of GST rates,” he added.
The Governor said that the MPC concluded that there has been a significant moderation in inflation. Moreover, the prevailing global uncertainties and tariff related developments are likely to decelerate growth in H2:2025-26 and beyond.”
“The current macroeconomic conditions and the outlook has opened up policy space for further supporting growth. However, the MPC noted that the impact of the front-loaded monetary policy actions and the recent fiscal measures is still playing out,” he said.
”The trade-related uncertainties are also unfolding. The MPC, therefore, considered it prudent to wait for the impact of policy actions to play out and greater clarity to emerge before charting the next course of action,” he said.
Accordingly, the MPC unanimously voted to keep the policy repo rate unchanged at 5.5% and decided to retain the stance at neutral, he added.
Taking various factors into account, real GDP growth for 2025-26 is now projected at 6.8%, with Q2 at 7.0%, Q3 at 6.4%, and Q4 at 6.2%.
Real GDP growth for Q1:2026-27 is projected at 6.4%. The risks are evenly balanced. Also considering various factors, including the effect of the GST cut, CPI inflation for 2025-26 is now projected at 2.6% with Q2 at 1.8%; Q3 at 1.8%; and Q4 at 4.0%. CPI inflation for Q1:2026-27 is projected at 4.5%t. The risks are evenly balanced.
In his opening remarks, Mr. Malhotra stated that since the August policy meeting, there had been significant developments on the domestic front amidst a fast-changing global economic landscape, which have altered the narrative on growth-inflation dynamics in India.
“Buoyed by a good monsoon, the Indian economy continues to exhibit strength by registering a higher growth in Q1:2025-26. At the same time, there has been a considerable moderation in headline inflation. The rationalisation of the goods and services tax (GST) rates is likely to have a sobering impact on inflation while stimulating consumption and growth. Tariffs, on the other hand, will moderate exports,” he observed.
“As for the global economy, it has been more resilient than anticipated, with robust growth in the U.S. and China. The outlook, however, remains clouded amidst elevated policy uncertainty. Inflation has remained above respective targets in some advanced economies, posing fresh challenges for central banks as they navigate the shifting growth–inflation dynamics,” he stated.
“Financial markets have been volatile. The US dollar strengthened after the upward revision of U.S. growth numbers for the second quarter, and treasury yields hardened recently as expectations of rate cuts by the Federal Reserve ebbed. Equities have remained buoyant across several advanced and emerging economies,” he pointed out.
Published – October 01, 2025 10:48 am IST
