Thirty-eight of 61 economists polled by Reuters expect the Reserve Bank of India to raise the repo rate by 25 basis points to 5.50% at its October 5-7 meeting. That is more than 60% of those surveyed, according to the poll published on September 28.

The case for a hike is broadening inflation. Nearly half of India's inflation basket rose by 4% or more year-on-year, up from around a third in March. A Reuters poll story also notes an October hike would be the first increase since February 2023.

The repo rate currently stands at 5.25%, held for a fourth consecutive bi-monthly review at the August meeting. Growth is strong: the economy expanded nearly 8% in the April-June quarter, and bank credit growth rose to more than 19% in July, nearly doubling from a year earlier.

'The RBI "must opt for the prudent course" of a 25-basis-point hike at its October meeting,' said Abhishek Upadhyay, co-head of research at ICICI Securities Primary Dealership.

The decision matters because borrowing costs for homes, cars and businesses follow the repo rate. India's one-year overnight index swap is already pricing in 90 basis points of hikes over the next 12 months, according to Reuters.