Will RBI hike repo rate? MPC begins 3-day meet as surging crude oil, inflation test policy limits
Adding to the strain, flared-up geopolitical tensions in West Asia have ignited a surge in crude oil. Escalating fuel costs threaten to push transportation expenses higher and trigger widespread price hikes across sectors.
- Oct 5, 2026,
- Updated Oct 5, 2026 9:35 AM IST
The Reserve Bank of India’s Monetary Policy Committee (MPC) will begin its three-day deliberations today, with financial markets closely watching whether escalating global crude oil prices and sticky domestic inflation will prompt a turn in the central bank’s rate trajectory.
The six-member panel, chaired by RBI Governor Sanjay Malhotra, will evaluate a complex macroeconomic environment before unveiling its policy decision on October 7. The meeting comes after the central bank maintained a status quo on the key benchmark repo rate at 5.25% in its previous four reviews.
After delivering a cumulative 125-basis-point rate cut in 2025, the Reserve Bank of India (RBI) has held the repo rate steady at 5.25% across four consecutive policy meetings. That period of status quo is now under strain. A potent mix of surging inflation, crude oil scaling $100 a barrel, a weakening rupee, and a global pivot toward tighter monetary policy has significantly heightened expectations of a rate hike.
However, the economic backdrop has tightened significantly in recent weeks. Inflation remains the central bank’s biggest headwind as its policy panel meets today. Domestic retail inflation hit an eight-month peak of 4.82% in August, marking its third straight month above the RBI's 4% target.
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Adding to the strain, flared-up geopolitical tensions in West Asia have ignited a surge in crude oil. Escalating fuel costs threaten to push transportation expenses higher and trigger widespread price hikes across sectors.
As global peers maintain tight monetary settings, expectations of an RBI rate increase are growing. A Reuters poll published ahead of the review showed almost 60% of economists betting on a 25-basis-point hike in October.
Concurrently, geopolitical friction in West Asia has pushed Brent crude benchmarks past $100 per barrel, raising worries over imported inflation and a widening current account deficit.
Market watchers and research brokerages remain divided over the central bank's next move. While several analysts predict a 25-basis-point hike to 5.50% to anchor inflation expectations, others argue that the committee may choose to hold rates to support domestic demand ahead of the peak festive season. Others emphasise the trade-offs involved for consumer demand.
The Reserve Bank of India’s Monetary Policy Committee (MPC) will begin its three-day deliberations today, with financial markets closely watching whether escalating global crude oil prices and sticky domestic inflation will prompt a turn in the central bank’s rate trajectory.
The six-member panel, chaired by RBI Governor Sanjay Malhotra, will evaluate a complex macroeconomic environment before unveiling its policy decision on October 7. The meeting comes after the central bank maintained a status quo on the key benchmark repo rate at 5.25% in its previous four reviews.
After delivering a cumulative 125-basis-point rate cut in 2025, the Reserve Bank of India (RBI) has held the repo rate steady at 5.25% across four consecutive policy meetings. That period of status quo is now under strain. A potent mix of surging inflation, crude oil scaling $100 a barrel, a weakening rupee, and a global pivot toward tighter monetary policy has significantly heightened expectations of a rate hike.
However, the economic backdrop has tightened significantly in recent weeks. Inflation remains the central bank’s biggest headwind as its policy panel meets today. Domestic retail inflation hit an eight-month peak of 4.82% in August, marking its third straight month above the RBI's 4% target.
MUST RAED | RBI repo rate: Crisil says India Inc can absorb 50-bps rate hike as corporate balance sheets remain strong
Adding to the strain, flared-up geopolitical tensions in West Asia have ignited a surge in crude oil. Escalating fuel costs threaten to push transportation expenses higher and trigger widespread price hikes across sectors.
As global peers maintain tight monetary settings, expectations of an RBI rate increase are growing. A Reuters poll published ahead of the review showed almost 60% of economists betting on a 25-basis-point hike in October.
Concurrently, geopolitical friction in West Asia has pushed Brent crude benchmarks past $100 per barrel, raising worries over imported inflation and a widening current account deficit.
Market watchers and research brokerages remain divided over the central bank's next move. While several analysts predict a 25-basis-point hike to 5.50% to anchor inflation expectations, others argue that the committee may choose to hold rates to support domestic demand ahead of the peak festive season. Others emphasise the trade-offs involved for consumer demand.