The committee maintained a neutral stance, noting that it was prudent to wait for the impact of past policy measures and for greater clarity on global developments before making further moves. The standing deposit facility (SDF) rate stays at 5.25%, while the marginal standing facility (MSF) rate and the Bank Rate remain at 5.75%.
The RBI noted that the global economy has been stronger than expected in 2025, supported by robust growth in the US and China, though elevated policy uncertainty, sticky inflation in some advanced economies, and volatile financial markets pose risks. In India, GDP expanded 7.8% in Q1 FY26 on the back of resilient consumption and investment, a revival in manufacturing, and steady services growth. Rural demand was buoyed by a good monsoon, while urban demand showed signs of recovery. Looking ahead, healthy agriculture prospects, rising capacity utilisation, GST rationalisation, and supportive financial conditions are expected to aid growth, though global trade and geopolitical risks remain a drag.
The central bank raised its real GDP growth forecast for FY26 to 6.8% from 6.5% earlier, projecting growth at 7% in Q2, 6.4% in Q3, and 6.2% in Q4. For Q1 FY27, growth is expected at 6.4%.
On inflation, the RBI cut its CPI forecast for FY26 to 2.6% from 3.1%, with projections of 1.8% in Q2 and Q3, 4% in Q4, and 4.5% in Q1 FY27. Inflation is seen staying contained, though tariff-related developments could weigh on the growth outlook in the second half.
The minutes of the meeting will be published on 15 October, and the next MPC meeting is scheduled for 3-5 December 2025.
Following the announcement, the Nifty Bank index gained 0.69% to 55,014, while the Nifty 50 rose 0.33% to 24,691.15. Among bank stocks, IDFC First Bank (down 1.61%), Canara Bank (down 1.39%), and IndusInd Bank (down 1.16%) led the losers. They were followed by Punjab National Bank (down 0.82%), Bank of Baroda (down 0.77%), State Bank of India (down 0.52%), Federal Bank (down 0.52%), and AU Small Finance Bank (down 0.02%). On the gainers’ side, Kotak Mahindra Bank advanced 1.62%, ICICI Bank gained 1.61%, HDFC Bank rose 0.87%, and Axis Bank added 0.16%.