The Indian stock market reacted positively to the Reserve Bank of India’s (RBI) October monetary policy announcement. Benchmark indices surged, with the Sensex rising over 250 points, Nifty 50 crossing 24,650, and Bank Nifty gaining 500 points up by 0.92% as of 11:23 am on October 1.
Here are the key updates from the RBI monetary policy outcome on October 1, 2025
The Monetary Policy Committee (MPC), chaired by RBI Governor Sanjay Malhotra, decided to keep the repo rate unchanged at 5.5%. The policy stance remains ‘Neutral’, reflecting a cautious approach that balances growth support with price stability.
Key Policy Rates:
| Policy Instrument | Rate (%) |
| Repo Rate | 5.50 |
| Cash Reserve Ratio (CRR) | 3.00 |
| Standing Deposit Facility (SDF) | 5.25 |
| Marginal Standing Facility (MSF) | 5.75 |
| Bank Rate | 5.75 |
The MPC voted unanimously to maintain these rates. The decision indicates that the RBI is monitoring inflation and growth trends closely while leaving room for future adjustments if necessary.
RBI has raised the FY26 GDP growth estimate to 6.8% from 6.5% earlier, reflecting stronger domestic activity. However, quarterly projections indicate moderation in the latter half of FY26.
Quarterly GDP Growth Estimates:
| Quarter | Previous Estimate (%) | Revised Estimate (%) |
| Q2 FY26 | 6.7 | 7.0 |
| Q3 FY26 | 6.6 | 6.4 |
| Q4 FY26 | 6.3 | 6.2 |
| Q1 FY27 | 6.6 | 6.4 |
The upward revision for FY26 reflects strong domestic demand, while global uncertainties and trade policy risks have moderated growth expectations in later quarters.
The RBI lowered its CPI inflation forecast for FY26 to 2.6% from 3.1%, reflecting easing price pressures and the anticipated effect of GST rationalisation.
Quarterly CPI Inflation Estimates:
| Quarter | Previous Estimate (%) | Revised Estimate (%) |
| Q2 FY26 | 2.1 | 1.8 |
| Q3 FY26 | 3.1 | 1.8 |
| Q4 FY26 | 4.4 | 4.0 |
| Q1 FY27 | 4.9 | 4.5 |
Governor Malhotra noted that ongoing tariff-related uncertainties, global financial market volatility, and geopolitical tensions could pose downside risks for inflation.
The RBI announced several reforms aimed at strengthening banking operations and improving credit flow:
Governor Malhotra highlighted that cumulative rate cuts of 100 basis points have reduced fresh loan rates by 58 basis points, supporting credit availability. The RBI aims to enable Indian banks to finance acquisitions by domestic corporations and plans to release a discussion paper on licensing new urban cooperative banks (UCBs).
Measures for retail and financial inclusion include re-KYC camps for Jan Dhan accounts, standardised settlement procedures for deceased account holders, and auto-bidding facilities in RBI Retail Direct for T-bills.
The central bank also reported strong external sector fundamentals, with forex reserves at $700.2 billion, sufficient to cover 11 months of imports, and gold holdings at a record 880 metric tonnes, valued at over ₹4.32 lakh crore ($71 billion). Strong remittances are expected to keep the current account deficit sustainable in the current fiscal year.
Also Read: RBI’s measures on financial markets, cybersecurity & payment systems
In conclusion, the RBI’s October 2025 monetary policy maintained rates while introducing structural and regulatory reforms to improve credit flow and banking efficiency. With GDP growth upgraded, inflation moderated, and measures supporting banks and corporates, the policy strikes a balance between sustaining economic growth and maintaining financial stability amid global uncertainties.
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