The Reserve Bank of India's six-member Monetary Policy Committee began its three-day October policy review on Monday, with its decision due on Wednesday, October 7. Economists and market participants widely expect a 25-basis-point hike that would take the repo rate to 5.50 per cent — the first increase since February 2023, after four consecutive policy reviews in 2026 left rates unchanged, Mathrubhumi English reported.
The repo rate currently stands at 5.25 per cent. The central bank had cut rates by a cumulative 125 basis points through 2025, but the cycle appears to be turning.
Why a hike is on the table
Inflation is the driving concern. Headline inflation averaged just 1.9 per cent between April 2025 and February 2026 — well below the RBI's 4 per cent medium-term target. But retail inflation rose to 4.82 per cent in August, above the target for a third consecutive month, according to data cited by Mathrubhumi. At its August review, the RBI projected real GDP growth of 6.7 per cent for FY27 and CPI inflation at 5 per cent.
External conditions are also weighing on the committee. EY, cited by ANI, says the RBI will weigh four factors: the US Federal Reserve's recent 25-basis-point hike, India's comfortable growth outlook, persistent wholesale and consumer inflation pressures, and above-trend growth in broad money supply.
What forecasters expect
Union Bank of India expects a 25-basis-point hike in October, followed by one or two more increases in FY27, which would take the repo rate to between 5.75 and 6.00 per cent, ANI reported. Analysts caution that if the RBI signals a sustained tightening path, loan EMIs could rise for borrowers in the months ahead.
The committee's statement on Wednesday will be closely parsed — not just for the rate decision, but for its tone on how long this round of tightening might last.
Sources:
RBI Repo Rate Hike: MPC Begins 3-Day Meeting, Loan EMIs May Rise — Mathrubhumi English
RBI MPC Begins 3-Day Meeting Today Amid Expectations of First Rate Hike Since 2023 — Punjab Kesari (ANI)
The repo rate currently stands at 5.25 per cent. The central bank had cut rates by a cumulative 125 basis points through 2025, but the cycle appears to be turning.
Why a hike is on the table
Inflation is the driving concern. Headline inflation averaged just 1.9 per cent between April 2025 and February 2026 — well below the RBI's 4 per cent medium-term target. But retail inflation rose to 4.82 per cent in August, above the target for a third consecutive month, according to data cited by Mathrubhumi. At its August review, the RBI projected real GDP growth of 6.7 per cent for FY27 and CPI inflation at 5 per cent.
External conditions are also weighing on the committee. EY, cited by ANI, says the RBI will weigh four factors: the US Federal Reserve's recent 25-basis-point hike, India's comfortable growth outlook, persistent wholesale and consumer inflation pressures, and above-trend growth in broad money supply.
What forecasters expect
Union Bank of India expects a 25-basis-point hike in October, followed by one or two more increases in FY27, which would take the repo rate to between 5.75 and 6.00 per cent, ANI reported. Analysts caution that if the RBI signals a sustained tightening path, loan EMIs could rise for borrowers in the months ahead.
The committee's statement on Wednesday will be closely parsed — not just for the rate decision, but for its tone on how long this round of tightening might last.
Sources:
RBI Repo Rate Hike: MPC Begins 3-Day Meeting, Loan EMIs May Rise — Mathrubhumi English
RBI MPC Begins 3-Day Meeting Today Amid Expectations of First Rate Hike Since 2023 — Punjab Kesari (ANI)
