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RBI Poised for Rate Hike Amid Surging Crude, Global Yields, and Inflation Risks
M
Moneycontrol•05-10-2026, 08:30
RBI Poised for Rate Hike Amid Surging Crude, Global Yields, and Inflation Risks
- •The Reserve Bank of India's Monetary Policy Committee (MPC) is expected to raise the repo rate by 25 basis points to 5.5 percent, marking the first increase since February 2023.
- •Rising crude oil prices, elevated global bond yields, and a weakening rupee are fueling inflation risks, strengthening the case for a rate hike.
- •The rupee crossed 96 per dollar, Brent crude hit $107 a barrel, and the 10-year US Treasury yield reached 5.2 percent, its highest since 2007.
- •Most economists anticipate the RBI to maintain its inflation forecast for the current fiscal year, though some expect an upward revision due to rising crude and food prices.
- •Despite strong Q1 GDP growth, the RBI is likely to retain its FY27 growth forecast, with liquidity management also a key focus ahead of the policy meeting.
Key Questions Answered
A Moneycontrol poll of 19 experts shows that a majority expect the Reserve Bank of India to raise the repo rate by 25 basis points to 5.5 percent. This would mark the first rate increase since February 2023.
The case for a rate hike is driven by rising crude oil prices, elevated global bond yields, a weakening rupee, and growing domestic inflation risks.
To manage excess liquidity resulting from nearly $133 billion in foreign currency non-resident bank inflows, the RBI has conducted variable rate reverse repo auctions and announced open market operations.
