‘Cuts Are Off The Table’: RBI Governor Says Future Rate Moves Could Be Pause Or Hike

Last Updated:October 07, 2026, 12:50 IST

RBI Governor Sanjay Malhotra said the change in MPC’s stance was intended to signal that the central bank was no longer considering a rate cut as its next move.

RBI Governor Sanjay Malhotra. (File Photo)

Reserve Bank of India Governor Sanjay Malhotra made it clear that a rate cut is not on the table in the near term after the central bank raised the repo rate by 25 basis points to 5.50 per cent. Speaking after the RBI’s latest monetary policy decision, Sanjay Malhotra said the change in the Monetary Policy Committee’s stance was intended to signal that the central bank was no longer considering a rate cut as its next move.

“We have clarified by changing the stance that there is no rate cut in the near term,” Sanjay Malhotra said. Instead, the RBI is now looking at either keeping rates unchanged or raising them further, with the scale of any future hike dependent on how economic conditions evolve.

“What we are contemplating is either a pause or a rate hike,” the RBI Governor said, adding that the extent of any further hike would depend on the evolving macroeconomic conditions.

Why Did RBI Change Its Stance?

The MPC changed its stance from “Neutral” to “Calibrated Tightening”. The shift comes alongside the 25-basis-point increase in the repo rate, taking it from 5.25 per cent to 5.50 per cent. The change signals a clear shift in the direction of monetary policy. While the RBI is not committing to another rate hike immediately, Sanjay Malhotra’s comments indicate that the possibility of further tightening is being considered rather than a reduction in borrowing costs.

Inflation Is A Key Concern

The RBI raised its inflation forecast for FY27 to 5.2 per cent from 5 per cent projected in August. Sanjay Malhotra said global inflation is expected to rise sharply, prompting monetary policy tightening by major central banks around the world. The sudden re-escalation of the West Asia conflict in September and the resulting hardening and volatility in global crude prices have also added to concerns.

RBI Raised Its Growth Forecast

The shift towards tighter monetary policy comes even as the RBI remains positive about domestic economic activity. The central bank raised its FY27 real GDP growth forecast to 7.1 per cent from 6.7 per cent in August. India’s real GDP growth stood at 7.8 per cent in the first quarter of FY27, while manufacturing and services activity remained in the expansion zone during the second quarter, although the pace of expansion moderated from the previous quarter. This means the RBI is now balancing strong domestic growth against rising inflation and global risks.

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What changes did the RBI make to the repo rate and its monetary policy stance?

The Reserve Bank of India raised the repo rate by 25 basis points to 5.50 per cent and shifted its Monetary Policy Committee stance from neutral to calibrated tightening.

Why did the RBI change its policy stance regarding interest rate cuts?

The RBI changed its stance because rate cuts are off the table in the near term, with future actions focused on a pause or further hikes depending on evolving macroeconomic conditions.

How did the RBI adjust its FY27 inflation and real GDP growth forecasts?

The RBI raised its FY27 inflation forecast to 5.2 per cent from 5 per cent and increased its real GDP growth forecast to 7.1 per cent from 6.7 per cent.

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