RBI may hike repo rate 25 bps each in October, December, analysts say
Analysts expect the Reserve Bank of India to raise key policy rates soon. Headline inflation is projected to rise further, influencing this decision. Global factors like oil prices and US Federal Reserve actions also play a role. Economists suggest two rate hikes in October and December this year. This move aims to manage inflation and maintain real interest rate credibility.
Reserve Bank of India policymakers may increase the key policy rate by 25 basis points at the October and December meetings, according to various analysts. This is due to several factors including rising headline inflation, expectations of the Indian-US rate differential narrowing, and the Federal Reserve's anticipated rate hikes.
Oil prices nearing the USD 100 per barrel mark and El Nino concerns are also contributing to the expected rate hike cycle, notes Deutsche Bank. Additionally, the strong GDP growth despite the ongoing West Asia crisis further supports the notion of rate hikes. Analysts predict that CPI inflation could surpass the 6.5 per cent mark before dropping below 6 per cent in early 2027.
The RBI has not raised rates for over a year, with the current repo rate at 5.75 per cent. The bank's decision to pause rate hikes in February and raise them again in April and June 2027 is also under consideration, potentially increasing overall hikes by 100 basis points.
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