Key points on RBI MPC minutes
- All six MPC members voted to raise the repo rate by 25 bp to 5.50%, the RBI’s first hike since February 2023.
- The vote on the new “calibrated tightening” stance was split 4–2. Nagesh Kumar and Ram Singh preferred to keep it neutral.
- Governor Malhotra said rate cuts are off the table in the near term. The next move can only be a hike or a pause.
- Next up: the Fed on 28 October and the RBI decision on Friday, 4 December.
What happened
On 7 October, the RBI raised the repo rate from 5.25% to 5.50% and shifted its stance from neutral to calibrated tightening. The minutes, released on 21 October, show how each member reached that decision.
| Policy rate / projection | October 2026 | Previous |
|---|---|---|
| Repo rate | 5.50% | 5.25% |
| SDF rate | 5.25% | 5.00% |
| MSF rate / Bank Rate | 5.75% | 5.50% |
| Stance | Calibrated tightening | Neutral |
| Repo rate vote | 6–0 for a hike | 6–0 for a hold (August) |
| Stance vote | 4–2 | – |
| FY27 CPI projection | 5.2% (Q2 4.9%, Q3 6.0%, Q4 5.7%) | Raised 20 bp |
| FY27 GDP projection | 7.1% | Raised 40 bp |
Markets had largely expected the hike. Before the meeting, an Economic Times poll found that 20 of 21 economists and bank executives expected a 25 bp increase.
Key takeaways from the minutes
- Inflation is broadening. Malhotra noted that 37% of items in the CPI basket had inflation above 4% in August, up from 20% in March. He said the length and size of the hiking cycle will depend on underlying inflation, how widely price pressures spread, and second-round effects of the supply shock.
- The committee expects inflation to stay high. The minutes project headline CPI averaging almost 5.8% over the next three quarters, citing a deficient monsoon, El Niño conditions and high energy prices.
- RBI members want to act early. Deputy Governor Poonam Gupta said inflation is mostly driven by external supply shocks, but she favoured hiking now rather than waiting, to protect the credibility of the inflation-targeting framework. Executive Director Indranil Bhattacharyya argued for setting aside a “cautiousness bias” and acting pre-emptively, since crude and food pressures are unlikely to ease quickly.
- External members are divided on how far to go. Saugata Bhattacharya said price pressures appear to be becoming entrenched, noting that wholesale prices have been running close to 9% year on year. Kumar and Singh voted for the hike but wanted a neutral stance. Kumar said inflation is mainly supply-driven and shows no sign of the economy overheating.
- The rupee is part of the inflation story. Kumar listed exchange rate depreciation alongside the weak monsoon, crude and precious-metal prices as factors behind the higher inflation forecast. A weaker rupee raises import costs, especially for oil.
Why it matters
Inflation has moved close to the top of the RBI’s band. CPI rose to 5.54% in September, driven by onion and other food prices, just inside the 2–6% tolerance band. It was 4.8% in August, after rising for 10 straight months.
The 4–2 split on stance is the key signal for markets. All six members agreed on this hike, but two did not want to commit to a tightening bias. That suggests a hike in December is not guaranteed and will depend on incoming data. Before the meeting, Nomura and SBI Research both expected a second hike in December, taking the repo rate to 5.75%.
Market reaction
- USD/INR: For context, the rupee hit its 2026 low of about 97.11 per dollar on 19 May.
- Bond yields: 10-year G-sec yield reaction.
- Global backdrop: The Fed raised rates by 25 bp in September, and markets now see a high chance of another Fed hike in December. Brent crude has been trading above $100. Both factors keep pressure on the rupee even as the RBI tightens.
Impact on Indian traders
USD/INR: Higher Indian rates can support the rupee by widening the interest-rate gap with other economies, which may attract foreign inflows. That support is weaker when the Fed is also hiking. If US yields keep rising, the rate gap may not widen much. The rupee’s direction is still likely to depend mostly on crude prices, the dollar and portfolio flows. The RBI’s swap facilities for NRI deposits and foreign borrowing have also brought in large dollar inflows this year.
EUR/INR, GBP/INR, JPY/INR: RBI tightening affects all INR pairs on NSE. Other central banks matter too. The Bank of England is expected to hike on 5 November, which could lift GBP/INR, while the ECB decides on 29 October.
Cross pairs: NSE also lists EUR/USD, GBP/USD and USD/JPY. Trading forex with unauthorised offshore platforms is not permitted under FEMA.
Shifts in global risk appetite, driven by oil, war headlines and Fed expectations, often move the rupee more than RBI decisions do. Our Risk-On / Risk-Off Meter can help you gauge the current mood before you trade INR pairs.
What to watch next
| Date (IST) | Event | Why it matters |
|---|---|---|
| Wed, 28 Oct, ~23:30 | FOMC decision | A hawkish Fed could weaken the rupee despite RBI tightening |
| Thu, 29 Oct | ECB decision | Drives EUR/INR |
| Thu, 5 Nov | Bank of England decision | Drives GBP/INR |
| ~12 Nov, 16:00 | India October CPI | The RBI projects Q3 inflation at 6.0% |
| ~27 Nov | India Q2 FY27 GDP | Strong growth gives the RBI room to keep hiking |
| Fri, 4 Dec, 10:00 | RBI MPC decision (meeting 2–4 December) | Hike to 5.75% or pause |
Possible scenarios:
- If October CPI comes in above 6% and growth holds up, a December hike to 5.75% is likely to become the base case.
- If food prices ease and core inflation stays subdued, the two members who wanted a neutral stance may push for a pause.
- For USD/INR, if the Fed sounds hawkish and crude stays above $100, the pair may stay under upward pressure regardless of RBI action.
Track all release times on our Economic Calendar, and find more coverage in Market Analysis & News.
FAQs
When were the RBI MPC minutes for October 2026 released?
On Wednesday, 21 October 2026, two weeks after the 7 October policy decision.
Did all MPC members vote for the rate hike?
Yes. All six members voted for the 25 bp hike to 5.50%. On the stance, the vote was 4–2, with Nagesh Kumar and Ram Singh preferring to stay neutral.
Will the RBI cut rates soon?
Governor Malhotra said rate cuts are off the table in the near term, and the next move can only be a hike or a pause. The next decision is due on 4 December 2026.
