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The Reserve Bank of India’s (RBI’s) six-member Monetary Policy Committee (MPC) is set to convene from October 5 to 7 to assess the economy and decide on the course of interest rates. The policy outcome will be announced on October 7, with market participants watching closely for a possible repo rate increase — the first since February 2023.
A Reuters poll conducted between September 18 and 28 found that almost 60 per cent of economists were of the view that the MPC could raise the repo rate by 25 bps to 5.50 per cent. Most economists surveyed also saw the possibility of another rate increase in December.
Expectations of monetary tightening have strengthened after retail inflation accelerated to 4.82 per cent in August. The reading remained above the RBI’s medium-term inflation target of 4 per cent for the third consecutive month.
The RBI has maintained the repo rate at 5.25 per cent over its past four policy meetings, following a cumulative 125-bps reduction during 2025. However, a combination of firmer inflation, elevated energy costs and rate increases by several major global central banks has fuelled expectations that the RBI could resume tightening in October.
A 25-bps increase would be the RBI’s first repo rate hike since February 2023, when the central bank raised the rate to 6.5 per cent.
The RBI’s bi-monthly MPC meeting will be held from Monday, October 5 to Wednesday, October 7.
The RBI is scheduled to announce its monetary policy decision at 10:00 a.m. on Wednesday. Governor Sanjay Malhotra will subsequently hold a press conference at 12:00 p.m. on the same day.
The RBI Governor’s policy statement will be streamed live on the central bank’s official YouTube channel from 10:00 a.m. The Governor’s subsequent media interaction will also be available to watch on the same platform.
India’s Monetary Policy Committee (MPC) is a six-member body tasked with deciding the country’s benchmark interest rates.
The panel has an equal split between RBI officials and external experts appointed by the Central Government, with three members representing the central bank and three bringing an independent economic perspective.
Governor Sanjay Malhotra heads the RBI contingent as the ex-officio chairperson. He is joined by Deputy Governor Dr. Poonam Gupta, who is responsible for monetary policy, and Indranil Bhattacharyya, an officer nominated by the RBI Central Board.
The external panel currently comprises Prof. Ram Singh, Director of the Delhi School of Economics; economist Shri Saugata Bhattacharya; and Dr. Nagesh Kumar, Director and Chief Executive of ISID.
BofA economists now expect the RBI to start raising interest rates at its October 7 meeting, instead of waiting until December as they had previously forecast. Their latest view points to a cumulative 100-bps increase, which would take the repo rate to 6.25% in the first half of 2027 as resilient economic growth and expanding inflationary pressures lead to a shift away from an accommodative policy stance.
A 25 bps hike in October, rather than December. The projected quantum of tightening has doubled from 50 bps to 100 bps, with 50 bps expected by December 2026 and a further 50 bps in H1 2027, it said.
Once the initial 50 bps increase is delivered, the RBI could adopt a "calibrated tightening" approach in December. Economic activity remains firm, supported by investment and credit demand. At the same time, higher energy costs, food inflation and a widening range of price pressures are adding to the arguments for tighter monetary policy, noted the brokerage.
Rajeev Sharan, Head of Research, Brickwork Ratings said:
"The rate cycle looks to be turning. After holding through 2026, the RBI faces growing pressure to raise rates at its October review, and a 25 basis point hike to 5.50% is now a real possibility, which would be the first increase since early 2023. The case for moving higher has strengthened: retail inflation has climbed to 4.82% and is set to peak around the festive quarter, crude is holding above USD 100, the rupee has slipped past 96, and the Fed's recent hike has narrowed the rate gap and added to currency pressure. On the other side, inflation is still within the target band and price pressures are not yet broad-based, which could persuade the committee to hold once more with a firmly hawkish tone. Either way, a rate cut is off the table for now, and the next move is more likely up than down."
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