RBI begins MPC meet; 25-bps rate hike likely
In Short
An interest rate hike would mark a reversal after rate cuts in 2025 and a prolonged pause thereafter, according to a PTI poll of 16 economists and bankers
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Reserve Bank of India
Mumbai: The Reserve Bank’s Monetary Policy Committee (MPC) began its three-day meeting on Monday and is likely to raise the repo rate by 25 basis points, amid rising inflation risks from the escalating conflict in West Asia.
An interest rate hike would mark a reversal after rate cuts in 2025 and a prolonged pause thereafter, according to a PTI poll of 16 economists and bankers. The RBI will announce its policy decision on October 7 at 10 am.
The last repo rate hike was in February 2023, when the RBI raised it by 25 basis points to 6.50 per cent. The rate currently stands at 5.25 per cent.
A majority of respondents expect a 25-bps hike with a hawkish tone, though views are divided on a change in the policy stance.
Bank of Baroda Chief Economist Madan Sabnavis expects a status quo this time, saying the next rate cycle could involve 50-75 bps of hikes. He said waiting until December would provide greater clarity on the kharif crop and September-October inflation.
Goldman Sachs expects 25-bps hikes in October and December and said the MPC could shift its stance from neutral to calibrated tightening or withdrawal of accommodation.
