Monetary Policy

The government has formally set the CPI inflation objective at 4% with a 2-percentage-point tolerance band for April 1, 2026–March 31, 2031. This notifies and binds the RBI's monetary policy framework, constraining the MPC to calibrate policy rates to keep inflation between 2% and 6%. The change reduces the RBI's room to prioritize non-inflation objectives when inflation approaches the band limits.

The Federal Open Market Committee voted 11–1 to keep the target federal funds rate in a 3.50%–3.75% range. Officials signaled one expected rate cut by the end of 2026. The committee had cut rates three consecutive times late in the previous year and held them steady at its January meeting. The statement cited an uncertain economic outlook tied to the war in Iran and noted that economic activity was expanding at a solid pace.

The MPC reduced the policy repo rate by 25 basis points to 5.25% after a three-day review while retaining a neutral stance. The central bank revised its FY26 GDP growth forecast to 7.3% from 6.8%. Open market purchases of government bonds worth ₹1 lakh crore were announced to bolster banking-system liquidity. A USD 5 billion buy-sell swap was arranged to provide FX liquidity and address domestic liquidity tightness.

BLS did not collect October 2025 reference-period survey data because of a lapse in appropriations. The unavailable datasets include the Consumer Price Index and the Real Earnings summary. Government funding was later restored and normal operations resumed, but the October reference-period data remain unavailable. BLS is unable to retroactively collect the October 2025 survey data.