RBI MPC hikes repo rate by 25 bps to 5.5%, near-term cuts ‘off the table’ | Finance News

The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) on Wednesday unanimously hiked the repo rate by 25 basis points to 5.5 per cent from 5.25 per cent.

 

At its policy meeting, held between October 5 and October 7, the committee changed the stance from ‘neutral’ to ‘calibrated tightening’.

 

The RBI changed the Standing Deposit Facility (SDF) rate to 5.25 per cent, while the Marginal Standing Facility (MSF) rate and the bank rate were changed to 5.75 per cent.

 

RBI Governor Sanjay Malhotra said the committee believed that, under the prevailing conditions, a rate cut was unlikely in the near term. This meant that the RBI’s next policy move would either be a rate hike or a pause, depending on how economic conditions and the outlook evolved.

  

“The duration and extent of the rate hike cycle, therefore, would be contingent on the actual growth inflation development and outlook, especially that of underlying inflation, extent of broadening of price pressure, and speed round effects on the supply shock,” he said.

RBI MPC: Growth outlook

 

The RBI Governor said the central bank has projected real GDP growth at 7.1 per cent for FY27.

 

Q2 at 7.2 percent

Q3 at 6.9 percent

Q4 at 6.8 percent

 

RBI MPC: Inflation forecast

 

The central bank projected CPI inflation for FY27 at 5.2 per cent. 

 

The quarterly inflation forecasts are:

• Q2 FY27: 4.9 percent

• Q3 FY27:6 per cent

• Q4 FY27: 5.7 percent