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RBI Expected to Hike Rates by 25 BPS, Tracking Fed Move
M
Moneycontrol•25-09-2026, 15:32
RBI Expected to Hike Rates by 25 BPS, Tracking Fed Move
- •A Moneycontrol poll indicates the RBI's MPC is likely to raise the repo rate by 25 basis points to 5.5 percent during its October 5-7 meeting, marking the first increase since February 2023.
- •The anticipated rate hike follows the US Federal Reserve's earlier 25 bps increase to 3.75 percent-4 percent, with a 71 percent probability of another Fed hike in October.
- •Despite successful FCNR-B deposit schemes, the rupee has not seen significant appreciation, briefly touching 96 per dollar before RBI intervention.
- •Bond yields have surged globally, with the 10-year US treasury yield reaching 5.2 percent and India's 10-year benchmark yield climbing to 7.1 percent.
- •The RBI is expected to maintain its inflation forecast for the current fiscal year, despite concerns over rising crude oil and food prices, while growth forecasts may be retained or slightly raised.
Key Questions Answered
A Moneycontrol poll of 13 economists and treasury experts indicates that the Reserve Bank of India is likely to hike the repo rate by 25 basis points to 5.5 percent, tracking the recent move by the US Federal Reserve.
The RBI has aggressively conducted variable rate reverse repo auctions, open market operations for bond sales, and short-tenor sell-buy swaps, bringing banking system surplus liquidity down to about Rs 4.75 lakh crore.
The RBI is expected to retain its FY27 inflation forecast while average inflation is projected in the 5-5.25 percent range. Meanwhile, real GDP growth for the fiscal year is projected at 6.7 percent by the central bank, though some forecasters have raised their estimates to 7 percent.
