The Reserve Bank of India is widely expected to raise the repo rate by 25 basis points when its Monetary Policy Committee announces its decision on Wednesday, October 7. It would be the central bank’s first rate hike since February 2023. The three-day MPC meeting began on Tuesday, with Governor Sanjay Malhotra set to address a press conference at noon after the 10 am announcement.

Abhishek Bisen, head of fixed income at Kotak Mahindra AMC, said the RBI now faces stronger growth alongside rising inflation and external pressures. After cutting the repo rate by 125 basis points and the cash reserve ratio by 100 basis points in 2025, the central bank is expected to tighten. Bisen sees cumulative tightening of 50 to 75 basis points over the next 12 to 15 months.

A Reuters poll found nearly 60 per cent of economists expect a 25-basis-point hike this week. India’s GDP growth of 7.8 per cent in Q1 FY27, inflation running above the 4 per cent medium-term target, crude oil near $100 a barrel and a weakening rupee have all strengthened the case. The repo rate has been unchanged at 5.25 per cent for four consecutive policy reviews.