FD interest rate rules to change from October 1: Key changes explained

BENGALURU: Economists predict the Reserve Bank of India will raise interest rates by 25 basis points to 5.50% in October, the first hike since 2023, with additional increases expected in December, a Reuters survey of experts revealed as inflation intensifies. Major central banks worldwide are beginning to hike rates or contemplate doing so due to energy cost surges resulting from the war in the Middle East, with the US Federal Reserve set to raise rates again after a recent increase.

The RBI is facing mounting pressure to support its defense of the currency against the dollar, which has weakened by about 6% this year. RBI Governor Sanjay Malhotra acknowledged that the central bank may be lagging behind the situation, indicating the need for a rate increase after the Federal Reserve's move. According to the September 18 to 28 Reuters poll, 35 out of 61 economists anticipated a 25 basis point rate hike to 5.50% at the end of the RBI's October 5 to 7 meeting, marking the first increase since February 2023.

The increase in consumer prices in August was primarily due to substantial hikes in energy and food costs. Nearly 60% of the polled economists, 35 out of 61, expected the Monetary Policy Committee to raise the repo rate by 25 basis points to 5.50% at the close of their October 5 to 7 meeting, marking the first increase since February 2023.