RBI poised for 0.25% repo rate hike in October as inflation and oil pressures mount

The Reserve Bank of India is expected to raise its repo rate by a quarter percentage point when its Monetary Policy Committee meets on October 5, 6 and 7, according to a PTI poll of 16 economists and bankers. A 25 basis point move would lift the rate from 5.25%, where it has held since December 2025, to 5.50%. The decision is expected on Wednesday, October 7, and would be the RBI's first hike since February 2023.

Inflation is the main driver. August CPI inflation rose to 4.82%, an eight-month high, from 4.45% in July, and food inflation climbed to 5.95%, Business Today reported. Crude oil is above $100 a barrel, adding to the oil risk economists cite, and Crisil's Dipti Deshpande said inflationary pressures "have mounted further mainly due to the re-escalation of the West Asia conflict." Union Bank of India's Kanika Pasricha said global central bank hikes, rising inflation risks and strong growth momentum "provide policy space to hike."

The consensus is not unanimous. L&T's Sachchidanand Shukla expects the RBI to hold, citing no evidence of demand-led inflation. Several economists in the poll expect two to three hikes in total, and HSBC's Pranjul Bhandari has called for moves in both October and December. Views on the policy stance range from no change to calibrated tightening to withdrawal of accommodation.

Global rates add to the pressure. The US Federal Reserve raised rates by 25 basis points on September 16, and minutes of that meeting are due on October 7, the same day as the RBI decision. Business Standard flagged the RBI policy, oil prices and bond yields as the likely drivers of Indian markets this week.

What to watch: the size of the move, whether the RBI changes its stance, any revision to its FY27 inflation projection of 5.0%, and whether the Fed minutes point to further US tightening.