From The Economic Times · ET CONTRIBUTORS · · 1m 10s
RBI May Hike Repo Rate by 25 Bps
RBI likely to hike repo rate 25 bps in October amid inflation and oil risks.
In brief
RBI likely to hike repo rate 25 bps in October amid inflation and oil risks. RBI will raise repo rate by 25 basis points in October to address rising inflation and oil-related pressures. Originally reported by The Economic Times.
Credit Policy Shift
India now has six monthly rate reviews instead of two seasonal ones.
Fed Hike Context
US Fed raised target range by 25 bps to 3.75, 4.00% in September.
RBI Rate Stance
RBI held repo rate at 5.25% for four consecutive meetings after 2025 cuts.
Inflation Trend
CPI rose to 4.82% in August, highest since December 2024.
Oil Risk Impact
Landed crude cost stays elevated with geopolitical risk leading to transport and input cost inflation.
Real Repo Rate
Real repo rate is only about 0.4% for an economy growing strongly.
Economist Expectations
Some economists expect MPC to hike 25 bps in October and possibly another in December.
Counter-Argument
Central bank should look through supply shocks as repo hike cannot lower oil prices.
Likely Action
RBI will move with 25 bps hike and hawkish message to preserve flexibility.
The headline
RBI will raise repo rate by 25 basis points in October to address rising inflation and oil-related pressures.
