RBI likely to raise repo rate by 25 basis points in October and December as inflation nears 6%
Economists expect the Reserve Bank of India to lift the repo rate by 25 bps in both the October and December meetings, driven by inflation edging toward the 6 % ceiling.
The third-quarter retail price index is expected to top 6 %, breaching the Reserve Bank of India's tolerance band and likely triggering a 25-basis-point increase at the October policy meeting, with a similar move anticipated in December. Economists point to higher crude oil prices above $100 a barrel, persistent food-price pressures and El Niño-related weather concerns as inflation drivers. HSBC forecasts a nine-month period of inflation above 5 % and a repo rate of 5.75 % after the two hikes.
Nomura and SBI Research also shift to a 25-bps lift in each meeting, while MUFG allows for a possible 50-bps total increase by early 2027. The RBI faces the added task of managing excess liquidity from recent foreign-currency inflows as credit growth accelerates.
Why it matters
Higher rates will affect borrowing costs for consumers and businesses across India.
How the sides frame it
LOW AGREEMENTCentrist coverage emphasizes how rising inflation and credit growth could pressure Indian banks to raise fixed-deposit rates, while right-leaning coverage stresses that inflation nearing the RBI’s 6 % tolerance is likely to trigger specific 25-basis-point repo-rate hikes in October and December.
CENTER
Centrist coverage frames the story around banking sector pressures, highlighting credit-deposit imbalances and the potential need for banks to lift FD yields.
RIGHT
Right-leaning coverage frames the story as a forecast of imminent RBI policy moves, focusing on inflation breaching the tolerance band and expected repo-rate increases.
The right emphasises
- retail price index expected to top 6 %, breaching the RBI’s tolerance band
- likely 25-basis-point repo-rate hikes in October and December
- inflation drivers such as high crude oil prices, food-price pressures and El Niño
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