RBI likely to raise repo rate by 25 basis points in October

Market expectations are building for a 25 basis point hike in the repo rate when the Reserve Bank's monetary policy committee convenes next month, according to a recent survey of economists and market participants. The anticipated move reflects growing concerns about inflationary pressures stemming from elevated international crude oil prices, which have begun feeding through to domestic energy costs and broader price levels across the economy.

The timing of a potential rate increase comes as India's economic growth remains resilient, with output expanding at a solid pace despite global uncertainties. This combination of sticky inflation and sturdy expansion may prompt the RBI to take a more hawkish stance on monetary policy to keep price pressures in check.

Beyond interest rate decisions, the central bank's October policy review is also expected to feature an upward revision to the growth forecast for fiscal year 2026-27. The stronger-than-anticipated economic performance in recent quarters has bolstered confidence about the outlook, suggesting the Indian economy may outperform earlier projections.

Rising crude prices have emerged as a key risk factor for inflation management. With international oil markets volatile, the RBI faces a delicate balancing act between supporting growth and maintaining price stability—a calculus that appears to be tilting toward tighter monetary conditions in the near term.