RBI’s October 2025 Monetary Policy Report Flags Softer Inflation and Stable Growth Outlook
SDG 8: Decent Work & Economic Growth | SDG 16: Peace, Justice & Strong Institutions
Institutions: Reserve Bank of India (RBI) | Ministry of Finance
The Reserve Bank of India released its Monetary Policy Report (MPR) for October 2025, providing the rationale behind the decision to keep the repo rate unchanged at 5.5% with a ‘Neutral’ stance. The Standing Deposit Facility (SDF) rate remains at 5.25%, while the Marginal Standing Facility (MSF) and Bank Rate are at 5.75%. This signals a wait-and-watch approach, allowing the MPC to assess the impact of recent rate cuts and government measures such as GST rationalisation.
The report expressed confidence in domestic resilience, revising real GDP growth upward to 6.8% for FY 2025–26, citing support from private consumption and government spending. At the same time, it significantly lowered the inflation projection to 2.6%, well within the 4% ±2% tolerance band, attributing this to easing food prices and the dampening effect of tax reforms. Key external risks highlighted include global trade tensions and US tariff measures that could weigh on export momentum.
The MPR draws directly on RBI’s September 2025 surveys, which showed a rise in consumer confidence (urban CSI 96.9, FEI 125.0; rural CSI 100.9), softening household inflation expectations, and professional forecasters revising growth upward to 6.8% while lowering inflation outlook to 2.6%. These signals validated the MPR’s assessment of a stable growth–benign inflation scenario.
By combining the MPC’s stance with household, business, and forecaster signals, the MPR affirms India’s current macro position: inflation contained, growth steady, risks external. It underscores the RBI’s twin priorities—anchoring expectations while sustaining recovery through calibrated policy.
What is the MPR? → The Monetary Policy Report, released twice a year, explains the rationale for monetary policy decisions, projects inflation and growth, and outlines risks. It is a statutory document of accountability to Parliament.
What is the Repo Rate? → The repo rate is the interest rate at which RBI lends short-term funds to banks against government securities. It is the main lever to influence borrowing costs and inflation.
What is the Standing Deposit Facility (SDF) Rate? → The SDF rate is the interest RBI pays banks for parking excess funds without collateral. It acts as the floor for short-term money market rates.
What is the Marginal Standing Facility (MSF) Rate? → The MSF rate is the cost at which banks can borrow overnight from RBI in emergencies, above the repo. It acts as the ceiling for short-term rates.
What is the Bank Rate? → The Bank Rate is the rate at which RBI lends long-term funds to banks. It is aligned with the MSF rate and influences overall lending costs in the economy.
Follow the full updates here: PIB Press Release PRID 2173560 | RBI Monetary Policy Report, Oct 2025 (PDF)