RBI May Raise Repo Rate by 0.25% Amid Inflation Concerns
The Reserve Bank of India (RBI) is anticipated to increase the repo rate by 25 basis points this week, marking the end of a falling interest rate era that began in February 2025. The current repo rate stands at 5.25% after several cuts earlier this year. Economists predict that inflation may exceed the RBI's forecast of 4.7%, potentially approaching 6% in Q2. Bankers suggest that the impact of the rate hike may be felt more quickly in bank lending rates than in bonds. The probability of a rate hike is estimated at 90%, with expectations for the terminal rate to reach 5.75%. Analysts foresee a limited overall hiking cycle of 75 basis points, focusing on liquidity management and aligning overnight rates with the policy rate.
Published 2 days ago • 04 Oct 2026, 04:05 PM IST