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RBI poised for 0.25% rate hike in October amid inflation surge
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CNBC TV18•04-10-2026, 15:32
RBI poised for 0.25% rate hike in October amid inflation surge
- •The Reserve Bank of India (RBI) is expected to increase the repo rate by 0.25% in its October monetary policy review, driven by escalating inflationary pressures and global central bank rate hikes.
- •This potential hike would mark a reversal in the RBI's interest rate policy, following rate cuts in 2025 and an extended pause, with the last increase occurring in February 2023.
- •Economists and bankers cite re-escalation of the West Asia crisis, pressure on energy and commodity prices, and coordination with global central bank actions as key factors.
- •While a majority anticipate a rate hike with a hawkish tone, some experts, like Sachchidanand Shukla, suggest the RBI might maintain the status quo due to a lack of demand-led inflation.
- •Experts also foresee an upward revision to the RBI's FY27 CPI inflation forecast, with several expecting two to three rate hikes over the fiscal year to normalize monetary policy.
Key Questions Answered
Experts and economists predict a 0.25% repo rate hike due to mounting inflationary pressures driven by the re-escalation of the West Asia crisis, energy and commodity price pressures, and rate hikes by global central banks.
The RBI's policy repo rate currently stands at 5.25%, following rate cuts in 2025 and an extended pause, with the last actual hike having occurred in February 2023.
India's retail inflation accelerated to an eight-month high of 4.82% in August, staying above the RBI's 4% target for three consecutive months amid broadening price pressures.
