The Reserve Bank of India’s Monetary Policy Committee meets from October 5 to 7. A Reuters poll of economists expects a 25 basis point hike. That would take the repo rate to 5.50 per cent. It would be the first increase since February 2023.

Why is a hike likely? Inflation hit 4.82 per cent in August. That is above the RBI’s 4 per cent target for the third straight month. Energy and food costs are rising as the Iran war pushes crude prices up. The rupee has also weakened about 6 per cent this year.

What is the repo rate? It is the rate at which the RBI lends to banks. When it rises, banks raise loan rates. Home, car and personal loans get costlier. Savers may earn more on deposits.

A hike would also support the rupee by making Indian assets more attractive. Nearly 60 per cent of polled economists expect the move, with another hike possible in December. Borrowers should watch the October 7 announcement.