October 2025 RBI MPC Highlights: Inflation Cools, Growth Resilient, Rates Held

~ October 2025 RBI MPC highlights: Repo rate stays at 5.50% with a neutral stance. Key reforms announced for fintechs include easier credit access and stronger consumer protections ~

The Reserve Bank of India (RBI) held its Monetary Policy Committee (MPC) meeting from September 29 to October 1, 2025. The Committee kept the repo rate unchanged at 5.50% and maintained a neutral stance. The RBI signalled that inflation is cooling faster than expected, while growth remains resilient. Along with the rate decision, the RBI announced a wide range of measures to simplify compliance, ease credit flows and strengthen consumer inclusion.

Let’s break down the main announcements and what they mean for the economy.

Policy Rate Decision and Rationale

The repo rate is the rate at which the RBI lends to banks. Keeping it steady means bank funding costs do not change immediately, so lending rates for borrowers should broadly hold. The decision was unanimous, with the MPC choosing to watch the impact of earlier policy moves and recent tax changes before acting further.
Here are the current key rates:

• Repo rate: 5.50%
• SDF (Standing Deposit Facility): 5.25%
• MSF (Marginal Standing Facility) and Bank Rate: 5.75%

Inflation Trends and Forecast

Inflation has eased more quickly than expected in recent months. Headline CPI is now projected at an average of 2.6% for 2025-26, much lower than earlier forecasts.

The main reasons behind this moderation are:

• Food prices have fallen sharply, with vegetables, pulses and spices showing strong corrections
• A normal monsoon and healthy sowing have improved supply prospects
• The recent rationalisation of GST rates has reduced prices of several items in the CPI basket

Core inflation stayed under control, though gold and services kept some pressure. Inflation is likely to stay low for most of the year and rise slightly in the last quarter due to demand and base effects.

Revised inflation forecast for 2025-26:

• Q2: 1.8%
• Q3: 1.8%
• Q4: 4.0%
• Full-year average: 2.6%
• Q1 of 2026-27: 4.5%

Growth outlook remains resilient

India’s economy continues to hold steady. The RBI has revised its GDP growth forecast upward to 6.8% for 2025-26.

Domestic demand is being supported by:

• Higher rural spending aided by a good monsoon
• Strong momentum in services and construction activity
• Rising capacity utilisation and capital investment
• Healthy sowing and improved reservoir levels are boosting agriculture

At the same time, external demand remains weak due to global trade tensions and tariffs. This may weigh on exports, even as domestic drivers stay strong.

Revised growth projections for 2025-26:

• Q2: 7.0%
• Q3: 6.4%
• Q4: 6.2%
• Q1 of 2026-27: 6.4%

The RBI noted that growth could see additional support during the festive season and through GST reforms.

What’s new for fintechs and lenders

Ease of doing business

• 9,000 circulars consolidated to simplify compliance
• More flexibility for banks in opening and maintaining current and OD accounts

Credit flow reforms

• Banks allowed to fund domestic Mergers and Acquisitions
• Higher limits on loans against shares (up to Rs. 1 crore) and IPO financing (up to Rs. 25 lakh)
• 2016 framework for large borrowers was withdrawn
• Lower risk weights for NBFC infra lending
• New capital norms from April 2027 with a glide path till 2031

Consumer-inclusion measures

• Digital banking services added to basic savings accounts
• Stronger grievance redressal and ombudsman scheme extended to rural cooperative banks

What This Means for Borrowers and Customers

• EMIs stay stable with the repo rate unchanged
• Zero-balance account holders gain digital access and faster complaint resolution

RBI is supporting growth, staying alert on inflation and opening space for simpler rules, better credit flow and wider inclusion.

Key Takeaways from the October 2025 MPC Meet

• Repo rate: Stays at 5.50% with a neutral stance
• Inflation forecast: Cut to 2.6% as food prices ease and GST changes take effect
• Growth outlook: Raised to 6.8% backed by domestic demand and investment
• Ease of business: 9,000 circulars merged, more flexibility in current and OD accounts
• Credit reforms: Higher limits on share and IPO loans, banks can fund mergers, NBFC infra risk weights reduced

Inclusion push: Digital banking added to basic accounts, stronger grievance redressal via ombudsman