Monetary Policy

The decision creates a hard ceiling on short-term automatic financing available to the central government, narrowing cash-management flexibility. WMA interest will be charged at the repo rate and overdrafts at repo plus 2 percentage points, raising the cost of breaching the cap.

The Reserve Bank of India's Monetary Policy Committee must now align interest-rate decisions to achieve the government-set inflation objective, making price stability the binding operational constraint for monetary policy. This reduces the central bank's discretion to prioritize growth or other goals when they conflict with the inflation mandate.

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.