Mumbai: The Reserve Bank of India’s Monetary Policy Committee (MPC) began its three-day policy meeting on Monday amid growing concerns over inflation linked to the escalating conflict in West Asia. A majority of economists and bankers expect the central bank to increase the repo rate by 25 basis points.
According to a PTI poll of 16 economists and bankers, such a move would mark a shift in the RBI’s recent policy direction. The central bank had cut interest rates during 2025 and maintained a prolonged pause afterward.
The RBI is scheduled to announce the outcome of the MPC meeting on October 7 at 10 am.
RBI Repo Rate at 5.25 Per Cent
The last time the RBI raised the repo rate was in February 2023, when it increased the rate by 25 basis points to 6.50 per cent. The repo rate currently stands at 5.25 per cent.
Most respondents in the PTI survey expect another 25-basis-point increase this time, along with a hawkish policy message. However, economists remain divided over whether the MPC will make any change to its existing policy stance.
A rate hike would signal that the RBI is becoming more concerned about inflationary pressures, particularly as developments in West Asia could create additional risks for prices.
Economists Divided Over Policy Stance
Bank of Baroda Chief Economist Madan Sabnavis has a different view. He expects the RBI to keep the repo rate unchanged at the upcoming meeting. According to him, the central bank may consider rate increases of 50–75 basis points during the next phase of the rate cycle.
Sabnavis said waiting until December could give the RBI more clarity on the kharif crop outlook as well as inflation data for September and October before making a decision.
Meanwhile, Goldman Sachs expects the RBI to raise the repo rate by 25 basis points in both October and December. It also expects the MPC could move its policy stance from neutral to calibrated tightening or withdrawal of accommodation.
The October 7 policy announcement will therefore be closely watched for both the rate decision and the RBI’s guidance on its future policy direction.
Disclaimer
This article is intended for general informational purposes and is based on the information provided regarding the RBI’s monetary policy meeting and expectations from economists. It should not be considered financial or investment advice. Monetary policy decisions and economic conditions can change, and readers should refer to official RBI announcements for the latest information.