Business Standard poll indicates that eight of 10 respondents expect a rate hike at the October 5–7 MPC meeting, while resilient economic activity could prompt an upward revision to the FY27 growth forecast.
The Reserve Bank of India (RBI) may begin a fresh interest-rate hiking cycle at its October monetary policy meeting, as higher international crude oil prices increase concerns about inflation, according to a Business Standard poll. Eight of the 10 respondents surveyed expect the Monetary Policy Committee (MPC) to raise the policy repo rate by 25 basis points (bps).
The six-member MPC is scheduled to meet from October 5 to 7, 2026. The decision will be closely watched by financial markets, banks, businesses and borrowers, as policymakers assess the balance between price stability and economic growth amid changing global conditions.
The poll reflects respondents’ expectations rather than a confirmed RBI decision. The final policy outcome will depend on the committee’s assessment of incoming inflation, growth, liquidity and financial-market data.
Repo Rate at 5.25% After Earlier Easing
The RBI last raised the repo rate in February 2023, increasing it by 25 basis points to 6.5%. Subsequently, the central bank cut rates by a cumulative 125 basis points during 2025 as monetary conditions shifted towards supporting economic activity.
The repo rate has remained unchanged at 5.25% over the past four policy reviews, according to the report. A 25-basis-point increase would take the rate to 5.50%, marking a shift from the recent pause towards tighter monetary policy.
The repo rate is the interest rate at which the RBI lends short-term funds to banks against eligible collateral. Changes in this rate influence borrowing costs across the financial system, although the speed and extent of transmission vary among banks, lenders and loan products.
A rate increase would signal that policymakers are giving greater weight to inflation risks. However, the committee's decision will also depend on whether price pressures appear persistent and how tighter financial conditions could affect consumption, investment and credit demand.
Higher Crude Oil Prices Raise Inflation Risks
International crude oil prices are a key variable for India's inflation outlook because the country relies heavily on imported crude to meet its energy requirements. A sustained increase in oil prices can raise costs across fuel, transportation, manufacturing and logistics.
Higher energy and freight expenses can also feed into the prices of goods and services, while increasing input costs for businesses. The effect on retail inflation depends on several factors, including domestic fuel pricing, exchange-rate movements, taxes and the extent to which companies pass higher costs on to consumers.
For the RBI, the central question is whether elevated crude prices could create persistent inflationary pressure rather than a temporary increase in costs. Policymakers must also consider the possibility that higher energy prices could weaken household purchasing power and raise operating expenses for businesses.
A rate hike could help contain demand-side inflationary pressures and reinforce the central bank's commitment to price stability. However, monetary policy cannot directly increase global oil supplies or eliminate the original source of an international energy-price shock.