Most economists predict a 25-basis-point increase in the Reserve Bank of India’s key policy rate in October, marking the first hike since February 2023 as inflation concerns and global pressures mount.
Most economists expect the Reserve Bank of India to raise its key policy rate at the Monetary Policy Committee meeting in October, as pressure builds from firmer inflation, abundant liquidity and higher rates abroad, according to a poll by The Times of India. The survey of a dozen economists found that most foresee a 25-basis-point increase, which would be the central bank’s first hike since February 2023.
The shift in expectations comes after the MPC kept the repo rate unchanged in October 2023 at 6.50%, with Governor Shaktikanta Das saying the priority was to bring inflation back to the 4% target on a lasting basis while still supporting growth. Reporting at the time by LiveMint, Business Standard and other outlets showed the committee maintained its withdrawal-of-accommodation stance, signalling that policy would stay tight even without another immediate increase.
That earlier decision also reflected concern that the effects of previous tightening had not yet fully worked through the economy. Business Standard reported that the central bank kept its growth and inflation forecasts unchanged, while Moneycontrol said excess liquidity had eased only gradually as the RBI used liquidity-draining measures, including the incremental cash reserve ratio. In that context, economists now expect any renewed move to be modest, with the poll pointing to a further 50 to 75 basis points of tightening over the financial year if inflation and global policy conditions remain adverse.
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