RBI raises repo rate by 25 bps to 5.5% and shifts to calibrated tightening

SBI said that global conditions are likely to turn more volatile soon, and getting the repo rate to 6 per cent from the present 5.50 per cent will be the best option.

About-face: MPC changes stance from neutral to calibrated tightening; market expects another 50 bps hike in FY27

It also raised its CPI inflation projection for FY27 to 5.2 per cent from the earlier 5 per cent

Why RBI hiked repo rate and yet another round is not ruled out

Bank of India raised repo based lending rate by 25 basis points to 5.50% and effective repo based lending rate from 8.10% to 8.35%, while mark up rate remains the same at 2.85%.

The RBI has raised the repo rate by 25 basis points to 5.50%. Here's how the rate hike could affect a Rs 50 lakh floating-rate home loan and a fresh Rs 50 lakh fixed deposit.

The Reserve Bank of India lifted its benchmark repo rate by 25 basis points to 5.50%, citing rising inflation and escalating energy costs

For borrowers, the rate hike could make retail loans, including car and home loans, more expensive. 

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said the central bank sees no concerns over the asset quality of non-banking financial companies (NBFCs) despite high liquidity in the banking system.Speaking at the post-Monetary Policy Committee (MPC) press conference, Malhotra said NBFC growth remained robust, with bank credit to the sector rising by around 37%.NBFC credit growth has also remained strong, although it is lower than that of banks. Malhotra said the RBI remains alert to risks emerging from asset quality as well as demand and price pressures.His comments came after the six-member MPC unanimously raised the repo rate by 25 basis points to 5.5% from 5.25% and shifted its stance from neutral to calibrated tightening.'Rate Cuts Are Off The Table’: RBI Guv Sanjay Malhotra Says Next Move Could Be Hike Or Pause As Inflation Risks Rise Bank credit growth expected to remain strongMalhotra said overall bank credit growth, currently at 19%, is expected to remain strong despite higher interest rates.While growth could moderate by a few percentage points, he said such changes would not significantly alter the broader credit outlook.On whether the RBI could use the cash reserve ratio (CRR) to manage liquidity, Malhotra said he did not want to rule out any option.The Governor also clarified that the shift to calibrated tightening effectively rules out an interest-rate cut in the near term. RBI keeps focus on 4% inflation targetMalhotra said the central bank's next policy action would involve either maintaining rates or raising them further. The scale of any increase would depend on evolving macroeconomic conditions and the growth-inflation dynamics.Explaining the revised stance, he said tightening refers to a monetary policy approach involving higher interest rates that can restrain economic activity. Calibrated tightening indicates that such action would be measured and based on changing economic conditions.In comparison, an accommodative stance involves relatively loose monetary policy and lower interest rates, while a neutral stance signals neither accommodation nor tightening.Malhotra reiterated that the RBI remains focused on bringing headline inflation towards the government's 4% target.

Why does a hike in repo rate hit your pocket? Does the repo rate hike mean an automatic increase in your loan EMIs? Is it better for you to opt for an EMI hike or an extension of your loan tenor? And how does this step from RBI help people looking to invest in fixed deposits? We decode:

The hike reflects a global shift towards tighter monetary policy as central banks battle inflation fuelled by Middle East conflict.

The MPC unanimously backed the rate hike and indicated that future policy action would either be a further hike or a pause, effectively taking rate cuts off the table in the near term. The shift has strengthened expectations that the RBI has entered a new rate-hike cycle.

Mumbai: Stating that the rupee may be "undervalued" as per many estimates, Governor Sanjay Malhotra on Wednesday assured that the Reserve Bank of India will ensure that the currency "stabilises" and will support it in reaching its "correct value".Also Watch: Speaking to reporters on a day that saw the local currency inching towards all-time low against the dollar, Malhotra noted that while markets can be "irrational" in the short term, they reflect their right value in the long run."We will ensure that the rupee stabilises, that the rupee finds its correct value, and we will support an orderly movement of the rupee in finding its correct value and at the same time in ensuring that there is no excessive volatility," the Governor told reporters at the central bank headquarters here.He was replying to a specific question about the rupee inching towards its all-time low of 96.96 against the dollar, during intraday trading on Wednesday.RBI Repo Rate Hike To 5.50% May Raise Home Loan Costs, But Experts Expect Housing Demand To Stay Resilient It can be noted that the domestic currency has been under pressure for much of this year, especially since the beginning of the West Asia conflict in late February, resulting in a spike in crude oil prices, which poses a direct challenge to an oil-importing country like India.To counter the fall the RBI introduced a concessional swap facility for diaspora deposits and bond issuances. Banks have mobilised nearly USD 133 billion under the FCNR(B) deposits facility alone, which lifted the pressure on the currency in the markets for a few days. However, the currency is back under pressure and has depreciated in the last few sessions."By a number of estimates, including the REER (Real Effective Exchange Rate), the rupee is not overvalued; it may be undervalued," Malhotra said on Wednesday.The remarks follow similar comments from Deputy Governor Poonam Gupta on September 24, who opined that there is a case for the rupee to stabilise and appreciate from here on.(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

Higher borrowing costs may be here to stay in India. With inflation pressures building from a weak monsoon, oil at $100 a barrel and a softer rupee, the RBI has begun tightening policy. Ruchi Bhatia explains why more rate hikes could follow. (Source: Bloomberg)

The central bank raised its FY2026–27 growth forecast from 6.7% to 7.1%, while lifting projected inflation to 5.2%

Government bond yields moved higher on Wednesday after the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) raised the repo rate and unexpectedly shifted its policy stance to calibrated tightening.The yield on the benchmark 10-year government bond climbed to 7.25% from its previous close of 7.19%.The MPC increased the repo rate by 25 basis points to 5.50%. RBI Governor Sanjay Malhotra said near-term rate cuts were off the table, with future policy action limited to either another rate increase or a pause depending on inflation and growth.Sensex, Nifty Recover From Day’s Lows After RBI Repo Rate Hike RBI raises FY27 inflation forecastMalhotra said the inflation outlook was no longer as benign as last year. Headline consumer price index (CPI) inflation is expected to average nearly 5.8% over the next three quarters, while core inflation is projected at 4.4% for FY27.The RBI raised its FY27 CPI inflation forecast to 5.2%. Inflation is projected at 4.9% in Q2, 6% in Q3 and 5.7% in Q4, before easing to 5.6% in Q1 FY28.The central bank expects inflation risks from deficient monsoon conditions, El Niño and volatile international oil prices. It also noted early indications of broader price pressures across the CPI basket. RBI flags risks to current account deficitOn the external sector, the RBI said India's current account deficit (CAD) remained modest despite global pressures.The CAD stood at 0.5% of GDP, or $4.2 billion, in Q1 FY27, compared with 0.4% a year earlier. However, the merchandise trade deficit widened during July-August, largely due to higher crude oil and electronic goods imports.Moderating global trade, elevated energy prices and trade policy uncertainty could put pressure on the CAD. However, strong services exports, remittances and bilateral trade agreements are expected to provide support.The services trade surplus reached $85.8 billion during April-August, while net transfers, mainly worker remittances, stood at $53.9 billion during April-July.The RBI expects a healthy balance of payments surplus in FY27, with foreign exchange reserves providing import cover of around 11 months.

Higher borrowing costs could make homebuyers more selective, while resilient economic activity may support broader real estate demand in coming months

The Reserve Bank of India raised borrowing costs for the first time in over three years on Wednesday, as the Middle East war pushes up prices in Asia's third-biggest economy and weighs on an already fragile rupee.

The Reserve Bank of India’s (RBI’s) Monetary Policy Committee (MPC) on Wednesday raised the repo rate by 25 basis points to 5.5%. This is the first hike in the policy rate since February 2023.While the rise or fall in the repo rate is generally linked to the rate at which the RBI lends to commercial banks in the country, it also impacts the general public through changes in loan interest rates and inflation.What Is Repo Rate? The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends short-term money to commercial banks against eligible securities. It is one of the central bank’s key tools for controlling inflation and influencing economic growth.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' Think of it this way: when a bank needs funds, it can borrow from the RBI at the repo rate and repay the amount with interest. If the RBI increases this rate, borrowing becomes more expensive for banks, which may pass on some of the additional cost to customers through higher lending rates.How Does a Repo Rate Hike Affect You?When the RBI raises the repo rate, loans such as home loans, car loans and personal loans can become more expensive. Borrowers with floating-rate loans linked to the repo rate are generally affected more quickly than those whose loans use other benchmarks.For example, consider someone paying a monthly equated instalment (EMI) on a home loan. If the interest rate increases, the borrower may have to pay a higher EMI or continue with a similar EMI for a longer repayment period. The actual impact depends on the loan amount, outstanding tenure, interest rate and lender’s reset mechanism. Higher interest rates can also discourage households and businesses from borrowing and spending. This helps moderate demand and can ease inflationary pressure over time.However, a repo rate increase does not automatically make every loan more expensive immediately. The effect depends on the type of loan and its interest-rate terms.What Happens When the RBI Cuts the Repo Rate?A repo rate cut generally makes borrowing cheaper for banks, potentially encouraging them to reduce lending rates. Lower borrowing costs can support home purchases, business investment and consumer spending, helping economic activity grow.Rate changes can also influence fixed deposit returns. Banks may offer higher deposit rates when interest rates rise, although the timing and extent vary between lenders.On October 7, 2026, the RBI raised the repo rate by 25 basis points to 5.50%. One basis point equals 0.01 percentage point. The decision reflects the RBI’s effort to contain inflation by making borrowing more expensive and moderating demand.

Mumbai: The Reserve Bank of India (RBI) has increased the repo rate upwards by 25 bps to 5.50%, while simultaneously changing the stance from “neutral” to “calibrated tightening”, signalling strict vigilance against inflationary pressures stemming from external volatilities and elevated crude prices. The Central Bank also noted that global headwinds could potentially become stronger, given recent re-escalation in West-Asia crisis and cautioned against the likelihood of de-acceleration in economic growth across countriesAlso Watch: This will increase the borrowing costs and can affect the near-term demand when it comes to real estate. "Although the increase in benchmark lending rate may soften near-term demand, the sector’s strong underlying fundamentals should help cushion the impact across most asset classes in India. A 40-bps upward revision in FY 27 GDP growth to 7.1% also indicates that India’s consumption driven economy should continue to be resilient benefiting from its demographic profile," said Vimal Nadar, National Director & Head of Research, Colliers India.He added that in case of residential segment, rise in borrowing costs is likely to drive homebuyers to adopt a nuanced & selective approach in their purchase decisions, particularly in price-sensitive categories. In this scenario, developers could absorb most of this financing pressure and provide comfort to homebuyers through festive discounts and innovative pricing plans, to boost sales.RBI Flags Elevated AI Asset Valuations, Geopolitical Tensions & High Debt As Major Risks To Global Economic Outlook Shrinivas Rao, FRICS, CEO, Vestian said, "The RBI’s 25-basis-point repo rate hike and a shift in stance from neutral to calibrated tightening signals a more restrictive monetary policy, reducing the likelihood of rate cuts in the near term. Higher mortgage rates could increase borrowing costs for homebuyers and raise the cost of capital for real estate developers. Developers may need to reassess their financing strategies and strengthen balance sheets to manage potential margin pressures and dampened demand, particularly if further rate hikes follow."While Piyush Bothra, Co-founder & CFO, Square Yards opined that the 25-basis-point repo rate hike is a calibrated and prudent step by the RBI, particularly in the current inflationary environment. While higher borrowing costs may create some near-term pressure on home-loan affordability, the move also reinforces macroeconomic stability, a critical factor for the long-term health of the sector.RBI Repo Rate Hike: How Much Will EMI Rise On Rs 20 Lakh, Rs 30 Lakh And Rs 50 Lakh Home Loans? "The Indian residential market today is much more resilient than it was during earlier rate cycles. Demand is being supported by rising household incomes, urbanisation, improving infrastructure and a growing preference for quality housing. A 25-bps adjustment, therefore, is unlikely to fundamentally alter the underlying housing story, particularly for mid-income, premium and well-located projects," Bothra added.Meanwhile, Akhil Saraf, Founder & CEO, Reloy said that with global bond markets under severe pressure, India’s relative stability and a measured repo rate hike are reassuring. "For real estate, this is constructive. While borrowing costs may rise marginally, greater macro stability reduces uncertainty and gives homebuyers more confidence to make long-term purchase decisions," he added.To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/ 

Mumbai: The Reserve Bank of India has flagged elevated valuations of artificial intelligence-related assets as one of the key downside risks to the global economic outlook, alongside geopolitical tensions, tighter global financial conditions and high public debt.Mumbai, Maharashtra: RBI Governor Sanjay Malhotra says, "... The sudden escalation of the West Asia conflict in September, along with the consequent hardening and volatility in global crude oil prices, has weakened global economic sentiment and heightened financial market… pic.twitter.com/Du6qk0Ab3S— IANS (@ians_india) October 7, 2026 In its Monetary Policy Statement for 2026-27, the RBI said the global economy has remained resilient, but the re-escalation of the West Asia conflict and volatility in crude oil prices have kept the global economic environment uncertain.Governor said, “With a resolution of the West Asia conflict remaining elusive, significant downside risks to the global outlook remain, including further tightening of global financial conditions, continuing elevated AI-related asset valuations and high public debt”.RBI Raises FY27 Inflation Forecast To 5.2%, GDP Growth To 7.1% The RBI's reference to AI-related asset valuations comes as part of its broader assessment of risks to global financial and economic conditions. The central bank also said the resolution of the West Asia conflict remains elusive, adding to uncertainty around the global outlook.The central bank also noted that inflation has accelerated in key economies, prompting a shift towards tighter monetary policy. The US Federal Reserve raised its policy rate by 25 basis points in September, while rate tightening by other major systemically important central banks has also strengthened expectations of higher global policy rates.Despite these risks, the RBI said the Indian economy has remained resilient. According to National Statistics Office estimates, real GDP growth in Q1 of 2026-27 stood at 7.8 per cent, higher than expected.‘Calibrated Tightening’: What The New RBI MPC Stance Means For Policy Rates Ahead Strong private consumption and fixed investment, a rebound in merchandise exports and sustained growth in services exports supported economic activity, the RBI said. On the supply side, manufacturing grew at a robust pace, while services activity strengthened on the back of domestic and external demand.The central bank said available high-frequency indicators for July-August suggest that domestic economic activity has maintained momentum in Q2. Domestic demand remains resilient and is supported by robust external demand, with merchandise exports registering double-digit growth.However, the RBI cautioned that global economic uncertainty could continue to affect domestic activity. Energy prices and supply chain pressures remain uncertain amid the West Asia conflict.The central bank said the adverse impact of these pressures is being contained through active diversification of supply sources.'Rate Cuts Are Off The Table’: RBI Guv Sanjay Malhotra Says Next Move Could Be Hike Or Pause As Inflation Risks Rise Domestic risks are also present. The RBI said a deficient southwest monsoon and strong El Niño conditions pose risks to agriculture and rural demand, although healthy foodgrain buffers and proactive government interventions are expected to reduce the impact.At the same time, continuing momentum in services and broadly stable employment conditions are expected to support urban demand. Strong capacity utilisation, robust credit flows and the government's infrastructure push are expected to sustain investment activity.The central bank revised the country’s growth projections for 2026-27 to 7.1 per cent from 6.6 per cent, with Q2 growth at 7.2 per cent, Q3 at 6.9 per cent and Q4 at 6.8 per cent.RBI also raised concerns over inflation pressures, saying headline CPI inflation is expected to average almost 5.8 per cent over the next three quarters, while core inflation is projected at 4.4 per cent for 2026-27.The RBI said the Indian economy remains resilient, but the combination of global financial tightening, geopolitical uncertainty, commodity price pressures and elevated AI-related asset valuations could shape the global economic environment in the period ahead.(Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)

Two factors worked to decide MPC’s move: inflationary pressures persist and growth is beating estimates. Hence, a hike in repo rate, while helping keep inflation in check, is unlikely to substantially impact GDP growth. The Indian economy has remained robust, with growth momentum spread across various segments. The committee expects the economy to retain its resilience.

In doing so, the RBI has shifted gears to join several central banks around the world who have raised rates to curb price rises or boost their currencies.

Mumbai: Home loan borrowers could face higher monthly repayments after the Reserve Bank of India (RBI) raised the repo rate by 25 basis points to 5.50 percent, just ahead of the festive season.The hike from 5.25 percent could make home, car and personal loans more expensive if banks pass on the higher borrowing cost to customers. For borrowers with floating-rate loans, the impact could come through a higher EMI or longer repayment tenure.How Much Can Your EMI Increase?To understand the possible impact, consider a home loan currently carrying an interest rate of 7.50 percent with a remaining tenure of 20 years.If the entire 25-basis-point increase is passed on by the lender, the interest rate would rise to 7.75 percent.Rs 20 Lakh Home LoanFor a Rs 20 lakh home loan at 7.50 percent for 20 years, the monthly EMI works out to approximately Rs 16,112.If the interest rate increases to 7.75 percent, the EMI would rise to about Rs 16,419.This means the borrower would pay around Rs 307 more every month.Rs 30 Lakh Home LoanA borrower with a Rs 30 lakh home loan at 7.50 percent for 20 years currently pays an EMI of approximately Rs 24,168. RBI Repo Rate Hike To 5.50% Puts Festive Housing Demand Under Pressure, Costlier Home Loans May Hit Retail Real EstateAt an interest rate of 7.75 percent, the monthly payment would increase to around Rs 24,628.The increase works out to about Rs 460 per month.Rs 50 Lakh Loan Gets CostlierFor a Rs 50 lakh home loan at 7.50 percent with a 20-year tenure, the EMI is approximately Rs 40,280.After a 25-basis-point increase to 7.75 percent, the EMI would rise to around Rs 41,047. That means an additional monthly burden of nearly Rs 767.The actual impact will depend on whether the lender passes on the full rate hike, the loan's benchmark and spread, and the remaining tenure.What Bankers Say?Pralay Mondal, MD & CEO of CSB Bank, called the repo rate hike a “prudent step” amid an uncertain global environment.“The underlying stress in inflation for the next few quarters warranted some steps in time to prevent further escalation,” Mondal said.He added that the RBI is expected to maintain adequate liquidity to ensure smooth functioning of money markets.Repo Rate Raised After Nearly Four YearsThe latest move marks the first repo rate hike since February 2023. The RBI had kept the rate unchanged at 5.25 percent in its previous three monetary policy meetings this year.The EMI calculation uses the standard formula: P × R × (1+R)^N / [(1+R)^N−1], where P is the loan amount, R is the monthly interest rate and N is the number of monthly instalments.

This was the first hike in the lending rate in four years.

The Reserve Bank of India (RBI) shifted its monetary policy stance from neutral to calibrated tightening on Wednesday as the Monetary Policy Committee (MPC) raised the repo rate by 25 basis points to 5.5%.The October 2026 policy decision marked the RBI's first repo rate increase since February 2023 and signalled a shift towards tighter monetary conditions amid growing inflation concerns.Under a calibrated tightening stance, the central bank is inclined towards keeping monetary policy tighter, with interest-rate cuts not under consideration in the current policy cycle.However, the stance does not necessarily mean that the RBI will continue raising interest rates at every MPC meeting.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' What calibrated tightening meansThe RBI will assess incoming data on inflation, economic growth and other domestic and global factors before deciding its next policy action.If additional rate increases become necessary, they are expected to be gradual and measured rather than aggressive. The central bank could also leave the repo rate unchanged if economic conditions do not warrant another increase.The RBI also has the flexibility to adjust interest rates between scheduled MPC meetings if circumstances require policy intervention.The shift therefore gives the central bank room to respond to evolving inflationary pressures while avoiding a predetermined path for future repo rate increases. Inflation risks drive RBI policy shiftThe change in stance comes as inflationary risks have increased and the global economic environment has become less favourable.India's retail inflation rose to 4.82% in August, remaining above the RBI's medium-term target of 4% for the third consecutive month.Higher crude oil prices have emerged as another source of concern because India depends significantly on imported energy. An increase in international oil prices can raise domestic fuel and transportation costs and contribute to broader price pressures.Pressure on the rupee could further increase the cost of imports, adding to imported inflation risks.Against this backdrop, the calibrated tightening stance signals that the RBI will remain focused on controlling inflation while monitoring economic growth before determining whether another repo rate increase is required.

Mumbai: The Reserve Bank of India (RBI) on Wednesday raised the repo rate by 25 basis points to 5.50 percent, potentially making home, car and other floating-rate loans costlier for borrowers.The decision was announced by RBI Governor Sanjay Malhotra after the three-day Monetary Policy Committee (MPC) meeting. The rate hike comes amid rising inflation risks, higher crude oil prices and uncertainty caused by the West Asia conflict.RBI Changes Policy StanceAlong with raising the repo rate, the RBI changed its monetary policy stance from ‘neutral’ to ‘calibrated tightening’, signalling a stronger focus on controlling inflation.The Standing Deposit Facility (SDF) rate was raised by 25 basis points to 5.25 percent, while the Marginal Standing Facility (MSF) rate increased to 5.75 percent.The RBI had kept the repo rate unchanged at 5.25 percent in its April, June and August policy meetings in 2026.Why Did RBI Raise Rates?Malhotra highlighted the sharp rise in crude oil prices and the West Asia conflict as major risks. Higher energy costs can push up transport and production expenses and eventually raise prices of goods and services.The central bank also remains concerned about global inflation, financial-market uncertainty and domestic food prices.Maulik Patel, Head of Research at Equirus Securities, said the economy has room to absorb tighter monetary policy.“The RBI hiked the policy rate by 25 bps while changing its stance to a calibrated tightening, while revising up both growth and inflation estimates,” Patel said. RBI Repo Rate Hike To 5.50% Puts Festive Housing Demand Under Pressure, Costlier Home Loans May Hit Retail Real EstateHe added that the move points towards further tightening, but an aggressive rate-hike cycle is unlikely given elevated yields, liquidity conditions and external risks.What Does It Mean For Your EMI?The repo rate is the interest rate at which the RBI lends short-term funds to banks. A higher repo rate increases borrowing costs for banks, which can then be passed on to customers.Borrowers with floating-rate home, car and other loans linked to external benchmarks could therefore see their interest rates and EMI burden increase.Inflation Forecast RaisedThe RBI raised its FY27 CPI inflation forecast to 5.2 percent from 5 percent. The core inflation estimate was also increased to 4.4 percent from 4.3 percent.Sujan Hajra, Chief Economist and Executive Director at Anand Rathi Group, described the rate hike as a “touch-and-go decision shaped by extraordinary circumstances”. RBI MPC Begins Three-Day Meet, 25 Bps Rate Hike Likely As Inflation Risks RiseHe said resilient domestic growth gave the RBI room to act, while food prices, crude oil, bond yields and rupee depreciation supported tighter policy.“This does not necessarily herald a series of further hikes,” Hajra said, adding that the calibrated tightening stance still allows the RBI to pause depending on inflation and external pressures.RBI Raises GDP Growth ForecastDespite tighter monetary policy, the RBI raised its FY27 real GDP growth forecast to 7.1 percent from 6.7 percent.The second-quarter growth estimate was increased to 7.2 percent from 6.4 percent, while the third-quarter forecast was raised to 6.9 percent from 6.5 percent. The fourth-quarter estimate was retained at 6.8 percent.

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday ruled out interest-rate cuts in the near term, saying the central bank's next move could be another increase or a pause depending on inflation and economic conditions.His comments came after the Monetary Policy Committee (MPC) increased the repo rate by 25 basis points to 5.50% from 5.25% and shifted its stance from neutral to calibrated tightening.Malhotra said rate cuts were "off the table" for now, indicating that future policy decisions would depend on evolving economic conditions.The latest increase is the RBI's first repo rate hike since February 2023, when the policy rate was raised by 25 basis points to 6.50%.Four of the six MPC members supported the shift to calibrated tightening, while two voted against the change.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' RBI flags rising inflation pressuresFollowing the repo rate increase, the standing deposit facility rate was adjusted to 5.25%, while the marginal standing facility rate and Bank Rate were raised to 5.75%.The RBI projected core inflation at 4.4% for FY27, marginally higher than its previous estimate of 4.3%. Consumer price index (CPI) inflation is expected to average 5.8% over the remaining three quarters of FY27.Malhotra said the inflation outlook was no longer as benign as last year and stressed that monetary policy must remain alert to the second-round impact of supply shocks. Crude oil, West Asia conflict add risksThe policy tightening comes amid higher crude oil prices, volatility in global financial markets and broadening domestic inflation pressures.India's retail inflation stood at 4.82% in August, remaining above the RBI's 4% medium-term target for a third consecutive month.Malhotra said the escalation of the West Asia conflict had weakened global economic sentiment and increased financial-market volatility.He also highlighted continuing trade uncertainty and expectations of higher global inflation.According to the Governor, tighter monetary conditions and the ongoing conflict pose downside risks to the global economy, while interest-rate changes will take time to transmit through the domestic economy.

In a notable move, the Reserve Bank of India has adjusted the repo rate, increasing it by 25 basis points to 5.50%. This adjustment comes in response to stronger-than-anticipated economic growth alongside rising price pressures. Additionally, the RBI has updated its FY27 GDP growth prediction to 7.1%, indicating optimistic economic performance. Meanwhile, inflation forecasts have been revised upwards, predicting Consumer Price Index inflation to hover around 5.8%.

MPC unanimously hikes repo rate by 25 bps to 5.50% and pivots stance to 'calibrated tightening'; Governor Sanjay Malhotra rules out near-term rate cuts as crude and food price pressures mount.

MPC raises repo rate by 25 bps, changes stance to calibrated tightening; economists see clear signal that easing cycle is over and further hikes of at least 50 bps remain on the table

RBI raised interest rates for the first time in nearly four years. Governor Sanjay Malhotra says given the current economic scenario,  rate hikes are off the table in the near-term. (Source: Bloomberg)

The benchmark repurchase rate moved up 25 basis points to 5.50% as the Middle East conflict fuels inflation and batters a weakened rupee.

Mumbai: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC)'s announcement on Wednesday on unanimously raising the repo rate by 25 basis points to 5.50% from 5.25%, is expected to pressure on consumer sentiment and discretionary spending. Also Watch: This has a direct correlation to housing demand, especially when the festive season is a key period for housing demand, and an increase in borrowing costs will affect buyer sentiment, experts say. The residential prices in the top seven cities in India have already risen significantly, stretching affordability."The RBI’s 25 bps increase in the repo rate was expected because of the prevailing inflationary pressures and geopolitical uncertainty brought on by the Gulf conflict. The rate hike will put pressure on consumer sentiment and discretionary spending – this has a direct correlation to housing demand. The festive season is a key period for housing demand, and an increase in borrowing costs will affect buyer sentiment," said Anuj Puri, Chairman - ANAROCK Group.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' As per Anarock recent research data, average residential prices increased 7% year on year. With the rate hike, dearer home loans will make buyers more selective and cause decision timelines to extend, particularly in the price-sensitive segments. As per the data, Q3 2026 recorded approx. 1,00,220 housing sales across the top seven cities, up 3% y-o-y and 10% quarter to quarter.Affordable housing comprised a 16% share of these sales. This momentum will now be tested because even a modest increase in EMIs will result in deferred purchase decisions or budget recalculations among affordable housing buyers."The rate hike is unlikely to have a direct impact on commercial real estate, which continues to be driven by structural demand from GCCs, technology, BFSI and other occupier segments. However, retail real estate may see some near-term impact. Higher financing costs coupled with the possibility of softer festive consumption could make developers and investors more cautious. Some new mall projects could potentially be deferred until there is greater clarity on demand," Puri said.To get details on exclusive and budget-friendly property deals in Mumbai & surrounding regions, do visit: https://budgetproperties.in/ 

While the increase has been predominantly on account of higher inflation in food and fuel groups, core inflation has also picked up indicating some signs of widening price pressures

The hike comes after nearly three-and-a half years; monetary policy stance was changed to ‘calibrated tightening’ from ‘neutral’

Following the MPC decision, the repo rate, or the rate at which the central bank lends to commercial banks, has risen from 5.25% to 5.5%.

India’s central bank raised interest rates for the first time in nearly four years and signaled further hikes may be on the table as rising inflation and a weakening currency drive a policy pivot. (Source: Bloomberg)

The Reserve Bank of India (RBI) on Wednesday raised its inflation and economic growth forecasts for FY27 as the Monetary Policy Committee (MPC) unanimously increased the repo rate by 25 basis points to 5.5%.The MPC also changed its policy stance to calibrated tightening from its previous position.RBI Governor Sanjay Malhotra said inflation and its outlook were no longer as benign as they had been last year.The central bank raised its consumer price index (CPI)-based inflation forecast for FY27 to 5.2%.Inflation is projected at 4.9% in Q2 FY27, before increasing to 6% in Q3 and easing to 5.7% in Q4. The RBI expects inflation at 5.6% in Q1 FY28.RBI MPC Raises Repo Rate By 25 Bps To 5.5%, Policy Stance Changed To ‘Calibrated Tightening' RBI raises FY27 GDP growth forecastThe central bank raised its real gross domestic product (GDP) growth projection for FY27 by 40 basis points to 7.1%.The RBI expects GDP growth of 7.2% in Q2 FY27, followed by 6.9% in Q3 and 6.8% in Q4.For Q1 FY28, however, the RBI lowered its growth forecast to 7.1% from 7.3%.Malhotra said domestic economic momentum remained broad-based and the MPC expected the economy to remain resilient.Monetary Policy Statement by Shri Sanjay Malhotra, Governor, RBI - October 7, 2026 https://t.co/ppHzJigh1K— ReserveBankOfIndia (@RBI) October 7, 2026 Consumption supports economic momentumPrivate consumption was a major growth driver during the first quarter, supported by resilient discretionary spending, according to the RBI Governor.High-frequency indicators showed that economic activity maintained momentum during the second quarter, although growth moderated somewhat compared with the first quarter.Manufacturing activity also remained resilient despite cost pressures, Malhotra said.The improved domestic growth outlook comes against a more challenging global economic environment. The RBI Governor said global growth was expected to decelerate this year compared with the previous year.The combination of stronger domestic growth and elevated inflation prompted the central bank to tighten monetary policy, with the MPC's latest decision taking the repo rate from 5.25% to 5.5%.

Since the RBI has hiked the interest rate by 0.25%, this means that banks are likely to increase their lending rates by a similar margin.

Rate hike after nearly three-and-a half years comes as inflation pressures rise due to the continuing West Asia conflict; policy stance revised to 'calibrated tightening' from 'neutral

RBI hikes repo rate to Will your home loan EMI get costlier

The RBI raises the repo rate to make people borrow and spend less in order to slow down runaway inflation - or rising prices

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC), headed by Governor Sanjay Malhotra, raised the policy repo rate by 25 basis points to 5.50% on Wednesday, marking its first rate hike since February 2023, as rising crude oil prices, food inflation and weather-related risks clouded the inflation outlook.The RBI also raised its FY27 GDP growth forecast to 7.1% from 6.7% and its inflation projection to 5.2% from 5.1%, while shifting its policy stance to calibrated tightening.The MPC voted unanimously to increase the repo rate, while the decision to change the policy stance to calibrated tightening was taken by a majority of 4-2.Also read: RBI Policy Meeting 2026 Live: Malhotra & co hikes repo rate by 25 bps to 5.50% as war creeps into Indian retail inflation; more rate cuts off the table in near termHere are the key takeaways from the RBI MPC meeting:1. Repo rate raised by 25 bps to 5.50%The MPC unanimously voted to raise the policy repo rate by 25 basis points to 5.50%, the first increase since February 2023. The Standing Deposit Facility rate now stands at 5.25%, while the Marginal Standing Facility rate and the bank rate have been adjusted to 5.75%.The rate hike comes amid renewed inflationary pressures from rising international crude oil prices, higher food prices and an uneven monsoon. The RBI also flagged the challenging global environment, marked by geopolitical tensions, trade uncertainty and volatility in financial markets.“The MPC noted that the global context, on account of geopolitical developments, remains challenging. Nonetheless, the Indian economy has been strong, and the economic momentum remains broad based,” Malhotra said.2. FY27 GDP growth forecast raised to 7.1%The RBI raised its real GDP growth projection for FY27 to 7.1% from 6.7%, an upward revision of 40 basis points, reflecting the resilience of domestic economic activity.The central bank projected growth at 7.2% for the second quarter, 6.9% for the third quarter and 6.8% for the fourth quarter of FY27. Real GDP growth for the first quarter of FY28 is projected at 7.1%.The RBI said high-frequency indicators for the second quarter pointed to sustained economic momentum, supported by steady services activity, manufacturing resilience, domestic demand and investment. Both manufacturing and services purchasing managers’ indices remained in expansionary territory.However, global economic uncertainty, supply-chain disruptions, elevated commodity prices and geopolitical tensions could weigh on the outlook. A weak southwest monsoon and strong El Niño conditions could also affect the upcoming rabi season and rural demand.Also read: RBI Inflation FY2026-27: Malhotra & Co raises inflation forecast to 5.2% for FY273. FY27 inflation forecast raised to 5.2%The RBI raised its CPI inflation forecast for FY27 to 5.2% from 5.1%, reflecting persistent price pressures from food and fuel.Retail inflation rose to 4.8% in August from 4.5% in July, driven largely by higher food and fuel inflation. The central bank also flagged a broadening of price pressures across food commodities and early signs of inflation becoming more generalised.The RBI projected CPI inflation at 4.9% for the second quarter, 6% for the December quarter and 5.7% for the fourth quarter of FY27. Inflation for the first quarter of FY28 is projected at 5.6%, with risks evenly balanced. Core inflation for FY27 is projected at 4.4%.The central bank highlighted the risks posed by volatile international oil prices, deficient and uneven monsoon rainfall and El Niño conditions, which could affect agricultural output and food prices.4. MPC shifts stance to calibrated tightening; rate cuts off the tableThe MPC changed its policy stance to calibrated tightening by a majority of 4-2, signalling a sharper focus on containing inflationary pressures.The central bank said inflation and its outlook were no longer as benign as they had been in the previous year. While there was some evidence of elevated inflation expectations and a generalisation of price pressures, the RBI noted limited signs of supply-side pressures becoming embedded in pricing behaviour.The governor underscored that rate cuts were no longer an option in the near term.“Given the current conditions, rate cuts are off the table in the near term, and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook,” Malhotra said.The duration and extent of any rate-hike cycle, he added, would depend on actual growth and inflation developments, underlying inflation, the broadening of price pressures and the second-round effects of supply shocks.5. Liquidity remains in surplus; RBI to align call rate with policy rateSystem liquidity increased substantially over the previous two months following measures undertaken to attract capital inflows. The average daily surplus liquidity, measured by the net position under the liquidity adjustment facility, stood at ₹5.9 lakh crore since the previous MPC meeting.Subsequent liquidity-absorption measures and quarterly advance-tax outflows moderated the surplus somewhat in September. The weighted average call rate largely traded in the lower half of the policy corridor, while short-term money-market rates moderated significantly.The RBI said it would continue using an appropriate mix of liquidity-management tools to align the weighted average call rate with the policy repo rate.6. RBI announces measures on account aggregation and financial marketsThe RBI announced two additional measures alongside its monetary policy decisions.First, it will allow interoperability among non-banking financial company account aggregators, enabling users to aggregate financial information across different account aggregators by onboarding with just one.Second, the central bank will facilitate SEBI-regulated depositories in including bank deposit account information in consolidated account statements. This will allow individuals to access information on bank deposits alongside their securities, equity and debt holdings in a consolidated statement. The measures are to be implemented by the end of 2026.The RBI will also constitute a technical consultative committee for financial markets to provide a forum for structured engagement with market participants and other stakeholders on policy and operational matters.

The RBI now expects Q2 FY27 CPI inflation at 4.9%, up from 4.7% earlier. The projection for Q3 has been raised to 6% from 5.9%, while Q4 inflation is seen at 5.7% compared with 5.5% earlier.

The RBI now expects Q2 FY27 CPI inflation at 4.9%, up from 4.7% earlier. The projection for Q3 has been raised to 6% from 5.9%, while Q4 inflation is seen at 5.7% compared with 5.5% earlier.

The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) on Wednesday unanimously raised the repo rate by 25 basis points to 5.50%, from 5.25%.The MPC also shifted its monetary policy stance to ‘calibrated tightening’.Following the decision, the Standing Deposit Facility (SDF) rate was adjusted to 5.25%, while the Marginal Standing Facility (MSF) rate and bank rate were raised to 5.75%.Malhotra said the inflation outlook for the near term remains tilted towards the upside because of continuing supply-side pressures.Monetary Policy Statement by Shri Sanjay Malhotra, Governor, RBI - October 7, 2026 https://t.co/ppHzJigh1K— ReserveBankOfIndia (@RBI) October 7, 2026 He pointed to geopolitical tensions and a weak monsoon associated with El Nino as some of the factors that could add to supply-side pressures and influence the inflation trajectory.The MPC said monetary policy primarily works by limiting the impact of second-round effects on inflation.RBI Governor Sanjay Malhotra said it remains difficult to separate second-round inflationary effects from the indirect impact of supply-side pressures, particularly those arising from higher production costs for energy and other inputs, as both factors are reflected in the available indicators.

The decision - to increase repo rate from 5.25 per cent to 5.5 per cent - was taken unanimously by the monetary policy committee (MPC), which is headed by Governor Sanjay Malhotra.

The decision - to increase repo rate from 5.25 per cent to 5.5 per cent - was taken unanimously by the monetary policy committee (MPC), which is headed by Governor Sanjay Malhotra.

The Reserve Bank of India’s Monetary Policy Committee (MPC) on Wednesday raised the repo rate by 25 basis points to 5.50%, its first rate hike in nearly four years, as rising oil prices amid US-Iran tensions and a weak monsoon threaten to push inflation higher.The six-member rate panel voted unanimously in favour of the rate hike. The committee changed its policy stance to calibrated tightening from neutral, signaling further rate hikes may be on the table.The repo rate was last raised in February 2023, when it was increased by 25 basis points to 6.50%.ALSO READ | Why RBI MPC lifted repo rates for the first time in nearly four years in October policy Of the 21 economists and bank executives polled by ET, 20 had expected the RBI to raise rates.The move marks the first rate hike under Governor Sanjay Malhotra, who took office in December 2024 and oversaw a series of rate cuts last year. It also puts the RBI in line with several Asian peers like Bank of Japan and Bank of Korea that have started tightening policy in response to renewed inflation pressures.The MPC “observed, in light of the available data, that it is clear that inflation and its outlook are not benign as they were last year,” Malhotra said in a televised statement from the RBI headquarters in Mumbai. Against that backdrop, he added that “recalibrating the policy rate” had become “an imperative.”The RBI’s revised stance “underscored that given the current conditions, rate cuts are off the table in the near term, and policy action can only be a hike or a pause, depending on the evolving conditions,” Malhotra added.ALSO READ | RBI raises FY27 GDP forecast to 7.1% from 6.7%Since the RBI’s last policy meeting in August, oil prices have surged above $100 a barrel, the rupee has weakened and inflation has accelerated.With inflation nearing 5% in the last three month and expected to move closer to the upper end of the RBI’s 2%-6% tolerance band in the December quarter, economists expect the central bank to continue tightening.On the macroeconomic front, the central bank upgraded India’s growth forecast for fiscal year 2026-27 to 7.1% from 6.7%. In addition to this, it revised its FY27 inflation target upward to 5.2% from 5.0%.Consequently, the standing deposit facility (SDF) rate stands adjusted at 5.25% and the marginal standing facility (MSF) rate and the Bank Rate at 5.75%.ALSO READ | RBI MPC Meeting at a Glance: Your one step guide for all decisionsThe RBI's hike acknowledges that cyclical inflation risks are no longer benign, said Radhika Rao, senior economist, DBS Bank, adding that a change in stance also underscored the RBI MPC's "hawkish intent.""Against a backdrop of elevated oil prices, tighter global conditions, and risks to food inflation from unfavourable weather, policymakers have chosen to reinforce inflation credibility before risks become entrenched."ALSO READ | Central bank raises inflation forecast to 5.2% for FY27The benchmark 10-year bond yield rose as much as seven basis points to 7.27% after the decision. The rupee was largely steady at 96.40 to a dollar.Crude back above $100 a barrelEscalating conflict in the Middle East has pushed crude prices above $100 a barrel, threatening to raise costs across an economy that imports most of its energy. A weak monsoon, meanwhile, could add to pressure on food prices.Brent crossed $101 today. It ended September at around $103, well above the RBI’s FY27 forecast of $85 a barrel. Goldman Sachs has also outlined a scenario in which oil prices could rise to as much as $120 a barrel if attacks on vessels in the Middle East intensify. If exports return to normal, the bank expects oil prices to move back towards $80 a barrel.The combination of higher crude prices and supply disruptions has added to inflation concerns globally. Domestically, economists see inflation potentially rising above the RBI’s 6% tolerance limit in the third quarter.The narrowing interest-rate differential between India and the US is another factor that weighed on the RBI’s decision.A narrower gap can make US assets relatively more attractive to investors and add pressure on the rupee.Foreign investors have pulled a record amount from Indian equities this year, amid elevated US yields, high oil prices and a weaker rupee. The NSE Nifty 50 has declined for eight consecutive weeks—its longest losing streak in 25 years.Too much cashThe RBI is also dealing with a large pool of excess liquidity that has pushed overnight borrowing costs below the policy rate, making financial conditions easier than intended.Much of the surplus came from the RBI’s June push to attract foreign-currency deposits to support the rupee. The move brought in about $133 billion, far above initial expectations of $50 billion-85 billion. While the inflows strengthened India’s external buffers, they also injected a large amount of liquidity into the banking system at a time when inflationary pressures were building.The central bank has already drained more than ₹1 lakh crore ($10.4 billion) through bond sales and other measures, as per Bloomberg.Traders will now look for signals on how aggressively the RBI plans to absorb the remaining surplus alongside further rate hikes.

A businessline poll of bank economists points to a 25 basis point hike to 5.50 per cent on Wednesday — the first increase since February 2023 — as firmer inflation, costly crude and a weak rupee end the pause

HSBC expects the RBI to raise the repo rate by 25 bps to 5.5% in October, followed by another 25-bps hike in December. It expects September inflation to rise to around 5.5% from 4.8% in August, with inflation averaging just above 6% in the fourth quarter of 2026.

RBI Governor Sanjay Malhotra told the Kautilya Economic Conclave last week that India can no longer be complacent, even as he described India as navigating the West Asia shock “from a position of strength”.The two statements do not sit well together. To be fair, the Governor was not pretending to take the shock away; he stressed that the West Asia conflict has added to inflationary pressures and that India remains exposed through commodity prices and the external account. A country can be both strong and watchful, but only if that strength is measured in today’s numbers.Inflation And Economic CushionMalhotra also pointed to retail inflation, which averaged 2 per cent last year, and growth that was the strongest among major economies. While those are fair numbers, he did not say how much cushion is left. Inflation has since more than doubled to 4.82 per cent in August, above the 4 per cent target. It remains within the RBI’s 2-6 per cent band and banks remain well capitalised, but the direction is clear.Brent is near $107 a barrel, and the rupee has slipped past 96 to the dollar, down about 6 per cent this year. The Nifty and Sensex are in a free fall, logging an eighth straight weekly loss, while the monsoon ended the season nearly 13 per cent below normal, the driest in a decade.Questioning The Position Of StrengthTherefore, the claim that the country is navigating from a “position of strength” held true last year, before the shock. The Governor did not clarify whether it still holds true, but he qualified his statement by saying that today’s resilience does not imply tomorrow’s immunity.The risks he named were global debt, elevated leverage, private credit, AI-linked valuations, and cyber threats. These are valid, but in a year when oil prices have gone through the roof and the currency has weakened considerably, we need to look inwards for solutions. He did mention diversifying oil imports and building strategic petroleum reserves, but those will take years to pay off.Will The MPC Hike Rates?The Monetary Policy Committee is set to announce its repo-rate decision on October 7. Whether the rate is raised or not, the Governor should be clear about the reasoning. It is not enough to keep repeating that India is on a strong wicket; he should explain what the decision means for the rupee and what inflation rate would make the central bank act.If the MPC holds the rate, it should admit that the rupee will bear the cost and that keeping interest rates separate from financial stability does not work well in a shock like this. To an extent, Malhotra was right to say financial trouble can build up overnight and take years to fix. What matters is how far the Governor will go and whether he acts on his own warning.

What if RBI hikes repo rate by bps Check impact on your home loan EMI interest

The Reserve Bank of India (RBI) officials met for the 3-day Monetary Policy Committee (MPC) meeting starting Monday amid growing expectations of the first repo rate hike in four years.The central bank has kept the repo rate unchanged at 5.25 per cent for four consecutive policy meetings after cutting rates by a cumulative 125 basis points in 2025.The latest RBI MPC meeting comes amid mounting inflationary risks and elevated crude oil prices which strengthened expectations that the central bank could shift towards monetary tightening.In the commodity market, crude oil prices remained below the $100 per barrel mark as it tanked 1.70 per cent to USD 98.59 per barrel.Also read: Explained: How RBI rate hike may impact Sensex, Nifty after 8-week losing streakRBI MPC meeting October 2026 date and time: When and where to watchThe monetary policy decision is due on Wednesday, October 7.RBI Governor Sanjay Malhotra will deliver the Monetary Policy Statement at 10:00 am on Wednesday, after which, he will hold a Post-Monetary Policy Press Conference at 12:00 noon along with other members of the MPC.One can watch RBI Governor Malhotra's live speech on official social media handles of the central bank, news channels, along with ET live stream on website, YouTube and other platforms.Experts bet on rate hikeAs Malhotra & co hold MPC meeting in the backdrop of rising inflation risks and uncertain geopolitical landscape, experts expect the central bank to raise repo rate during the October meeting.Union Bank of India expects the RBI to raise the repo rate by 25 basis points in October and deliver further hikes in FY27. According to the bank, the repo rate can potentially tick up to 5.75-6 per cent.“We expect a 25bps rate hike, followed by one or two additional hikes during the remainder of FY27, taking the repo rate to 5.75–6.00%, accompanied by hawkish guidance signalling continued vigilance on inflation,” it said in its MPC report.As per EY, RBI is likely to weigh four key factors at its October 2026 Monetary Policy Committee (MPC) meeting:the US Federal Reserve’s recent 25-basis-point rate hikeIndia’s comfortable growth outlookpersistent inflationary pressures reflected in WPI and CPIsustained above-trend growth in broad money supply (M3)“Chances for a change in the RBI’s policy stance and a 25-basis-point hike in the repo rate are high,” EY said.Also read: RBI likely to hike repo rate by 25 bps to 5.50% in October policy: ET PollRBI MPC Meeting: Key announcements made last timeAt its August MPC policy meeting, the MPC kept the benchmark repo rate unchanged at 5.25 per cent and retained its ‘neutral’ stance, opting to wait for greater clarity on the inflation outlook amid uncertainties over the southwest monsoon, El Nino, geopolitical tensions and global trade policies.Malhotra & co kept the Standing Deposit Facility (SDF) rate unchanged at 5 per cent, while retaining the Marginal Standing Facility (MSF) rate and the bank rate at 5.5 per cent.The governor highlighted that headline inflation was expected to rise, largely due to supply-side pressures from food and fuel, while core inflation remained moderate and was projected to ease after peaking in the third quarter. He further noted that the Monetary Policy Committee needed greater clarity on the trajectory and composition of inflation before taking further policy action.

Mumbai: The Reserve Bank of India’s Monetary Policy Committee (MPC) began its three-day meeting on Monday, with expectations building that the central bank could raise the repo rate by 25 basis points amid rising inflation risks and the West Asia conflict.The RBI will announce the monetary policy decision on October 7 at 10 am. A PTI poll of 16 economists and bankers showed that a majority expect a 25-basis-point hike, along with a hawkish policy tone.Rate Hike Could Mark Policy ReversalA rate increase would mark a reversal in the RBI’s policy direction after rate cuts in 2025 and a prolonged pause thereafter. The repo rate currently stands at 5.25 per cent.The RBI last raised the repo rate in February 2023, when it increased the rate by 25 basis points to 6.50 per cent.Goldman Sachs expects the RBI to raise rates by 25 basis points each in October and December. It also sees the possibility of the policy stance shifting from “neutral” to “calibrated tightening” or “withdrawal of accommodation”.Inflation Risks RiseIndia’s retail inflation accelerated to an eight-month high of 4.82 per cent in August from 4.45 per cent in July.Dipti Deshpande, principal economist at Crisil, said inflationary pressures have increased following the escalation of the West Asia conflict and its impact on energy and commodity prices. RBI May Raise Rates By 25 Basis Points In October, Economists Flag Rising Oil Prices And InflationThe government has mandated the RBI to keep CPI inflation at 4 per cent, with a tolerance band of 2-6 per cent.Some Experts Expect A PauseHowever, not everyone expects an immediate hike. Bank of Baroda Chief Economist Madan Sabnavis expects the RBI to maintain the repo rate, arguing that waiting until December would provide greater clarity on the kharif crop and inflation.Shrikant Goyal, Managing Director at Getfive Funds, also expects the MPC to maintain the repo rate and neutral stance.Vineet Nahata of Power Gilt Treasuries said a 50-basis-point increase would not be surprising given rising global bond yields, though he sees a 25-basis-point hike as more likely.

The Reserve Bank of India (RBI) began its three-day Monetary Policy Committee (MPC) meeting on Monday, with the policy decision scheduled for Wednesday, amid rising inflation, crude oil prices above $100 a barrel and pressure on the rupee.The MPC is meeting from October 5 to October 7 to decide on the benchmark repo rate. Markets are closely watching whether the central bank will raise the rate for the first time since February 2023. The repo rate currently stands at 5.25%.Economists expect the RBI to consider beginning a rate-hike cycle earlier than previously anticipated as energy costs and broader inflationary pressures increase.Markets Brace For RBI Policy And Q2 Earnings, West Asia Tensions To Guide Sentiment Analysts expect 25 bps rate hikeAccording to media reports, Bank of America (BofA) is expecting the RBI to raise the repo rate by 25 basis points (bps) in October instead of December, as it had forecast earlier.BofA said higher energy costs, food inflation and broader price pressures have strengthened the case for tighter monetary policy after nearly two years of accommodation.An SBI report also highlighted the risks posed by geopolitical tensions, higher crude prices and the repricing of risks in global markets. It said taking pre-emptive action could be preferable to falling behind the inflation curve. Inflation, crude prices put RBI in focusInflation has become increasingly broad-based. Consumer Price Index (CPI) inflation increased to 4.82% in August from 4.45% in July.Strong El Nino conditions and the possibility of below-normal rainfall in October could pose further risks to rabi crop output, adding to concerns over food prices.At the same time, crude oil prices above $100 a barrel could increase imported inflation pressures for India. Higher global bond yields and weakness in the rupee have further complicated the policy environment.Together, rising crude oil prices, persistent inflationary pressures and higher global yields have narrowed the RBI's room to keep interest rates unchanged.The MPC's decision on Wednesday will therefore be closely watched for indications of whether the central bank is ready to shift towards tighter monetary policy.

On Monday, the Reserve Bank of India's Monetary Policy Committee will hold important meetings. Analysts are anticipating a 25 basis points increase in the key interest rate, raising it to 5.50%. The surge in inflation is attributed to elevated crude oil costs and subpar agricultural production. Many economists advocate for a rate hike as a crucial measure to tackle ongoing inflation issues, with outcomes to be revealed on October 7.

The last repo rate hike was in February 2023, when the RBI raised the rate by 0.25% to 6.50%.

The last repo rate hike was in February 2023, when the RBI raised the rate by 0.25% to 6.50%

New Delhi: Economists expect the Reserve Bank of India to start raising interest rates at its October policy meeting, as higher oil prices and rising inflation strengthen the case for early action.The Monetary Policy Committee will meet from October 5 to 7 to decide the benchmark repo rate. Some economists have brought forward their earlier forecast of a December increase.October hike gains supportBank of America now expects a 25 basis point increase in October, citing higher energy costs, food inflation and wider price pressures. A rise of 25 basis points equals 0.25 percentage points.The bank said the RBI appeared ready to begin withdrawing policy support after almost two years of monetary accommodation.SBI Research also said risks had shifted firmly towards a 25 basis point increase. It pointed to spreading inflation, worsening global conditions, changing liquidity and a fresh reassessment of risks across markets.The report argued that acting early would be prudent amid geopolitical tensions and uncertainty over crude prices.Inflation and oil pose risksRetail inflation climbed to 4.82 percent in August from 4.45 per cent in July, adding pressure on policymakers.Strong El Nino conditions and the possibility of below-normal rainfall in October could create further risks for the winter crop, the report said. Home, Car Loan EMIs May Get Costlier, RBI Could Hike Repo Rate In October Amid Rising InflationHigher crude prices and rising global bond yields have also reduced the RBI’s room to keep rates unchanged.BNP Paribas India said the country’s economic outlook had weakened in recent weeks, with Brent crude crossing $100 a barrel and US Treasury yields moving towards 5 per cent.Nomura expects limited increasesNomura, however, expects the RBI to limit increases to 25–50 basis points during this cycle. RBI’s Rate Pause Hits A Wall, Is Another Interest Rate Hike Now Inevitable?Its analysts believe markets are expecting sharper tightening than conditions justify. They assigned an 80 per cent probability to a limited policy adjustment, rather than a broader cycle involving rate increases exceeding 75 basis points.The final decision rests with the MPC.