​​​​​​​RBI Monetary Policy Report (October 2025) Essentials

1. Policy Decision & Stance

   •    The Monetary Policy Committee (MPC) meeting became the 57 th meeting, which took place between Sep 29 and Oct 1, 2025.

   •    Repo Rate: Kept unchanged at 5.50%.

   •    Position: Adopted the stance of being neutral in order to have a balance between growth and stability.

Adjusted Growth Projections (Highlights).

•    FY 2025-26 GDP Growth: Updated to 6.8 per cent, as compared to 6.5 per cent.

  •    Quarterly Breakdown: Q1: 7.8%, Q2: 7.0%, Q3: 6.4%, Q4: 6.2%.

•    FY 2026-27 GDP Growth: GDP is forecasted to grow at 6.6% (on normal monsoon).

•    Drivers: Good investment, consumption, government expenditure, GST 2.0 and high capacity utilization.

Inflation Outlook

•    FY 2025-26 CPI Inflation Projection: Reduced to 2.6 per cent.
•    Recent Trend: Dropped to an 8-year low of 1.6% in July 2025, and then increased to 2.1% in August (within the target band of RBI).
•    Key Factors:
  •        Food Prices: The 9 months fall is the longest in CPI history.
  •        GST 2.0: The rate rationalisation reduced prices on 11.4 per cent of the CPI basket.

Extrinsic Sector & World.

•    Current Account Deficit (CAD): Relaxed to 2% GDP in Q1 FY26.
•    Remittances: India is the largest in the world (US$ 35.3 billion).
•    Foreign Investment: The gross FDI flows in were US 37.7 billion (Apr-July 2025), toppled by Singapore, the US and Mauritius.
•    Global Agency Projections of India IMF (6.4%), Fitch (6.9%), S&P (6.5%), OECD (6.7%) in FY26.

Markets & Currency

• Equity Markets (Apr-Sep 2025): Sensex ( +3.9%), MidCap ( +7.7%), SmallCap ( +12.1%).
• Indian Rupee: Two way movement was evident but it was one of the least volatile emerging market currencies.