The Reserve Bank of India raised its FY27 inflation projection to 5.1% on October 7, 2026. Governor Sanjay Malhotra said, "The MPC voted unanimously to increase the policy repo rate by 25 basis points." Higher crude oil prices and food costs pushed inflation up, forcing the bank to tighten its stance.
The Reserve Bank of India (RBI) on Wednesday (October 7, 2026) marginally raised inflation projection to 5.1% for FY27 from earlier forecast of 5%, Governor Sanjay Malhotra said.
Consumer inflation accelerated in August to 4.82% from a year earlier, above the Reserve Bank of India's 4% medium-term target for a third consecutive month. Higher prices of fuel and food are now biting the economy with nearly half of the consumer basket seeing inflation above 4%. Inflation is expected to peak around 5.9% in the third quarter, with deficient monsoon conditions and crude oil prices around $100 a barrel adding to the risks.
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The RBI raised its benchmark repo rate by 25 basis points to 5.5% fort he first time in nearly four years.
In his statement, RBI Governor, Sanjay Malhotra said, "After a detailed assessment of the evolving macroeconomic and financial conditions, developments and the outlook, the MPC voted unanimously to increase the policy repo rate by 25 basis points.
RBI hikes repo rate by 25 basis points to 5.5%
Following the repo rate increase, the standing deposit facility (SDF) rate stands at 5.25%, while the marginal standing facility (MSF) rate and Bank Rate are at 5.75%. The MPC stance was changed to a calibrated tightening by a majority."
India has joined major countries in raising its repo rates as higher oil prices weigh on currencies triggered by the West Asian war. The U.S. Federal Reserve raised its policy rate by 25 basis points in September, while U.S. 10-year Treasury yields have remained elevated at around 5.3%.