RBI’s October 7 rate decision: what to watch

The Reserve Bank of India’s Monetary Policy Committee will announce its interest rate decision on Wednesday, October 7. Markets widely expect a 25-basis-point hike.
It would be the RBI’s first rate increase since February 2023. The repo rate has stayed at 5.25% for nearly 10 months after cuts totaling 125 basis points in 2025.
Why a hike is expected: crude oil is near $100 a barrel, the rupee is weakening, and inflation is broadening beyond food and fuel. Nearly 60% of economists in a Reuters poll expect the 25-basis-point move.
What it means: a hike raises borrowing costs for home and business loans. It supports the rupee and signals the central bank’s focus on inflation over growth.
What to watch: the policy statement at 10 am and Governor Sanjay Malhotra’s press conference at noon. Guidance on future hikes matters as much as the decision. Markets are pricing a possible 100-basis-point tightening cycle through 2027.
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