The Monetary Policy Committee of the Reserve Bank of India commenced its three-day deliberations on Monday against a backdrop of escalating geopolitical unrest in the Middle East. With geopolitical friction amplifying fresh inflation risks across the economy, market expectations indicate that the central bank could announce a 0.25 percent increase in the benchmark repo rate. Economists and banking professionals suggest that an upward revision during this monetary policy review would also signify a decisive turn in the central bank's overarching policy stance.
Policy Decision Scheduled for October 7 Morning Announcement
After initiating a sequence of rate cuts in 2025, the Reserve Bank of India maintained an extended pause without altering its monetary trajectory. In a recent social media statement, the central bank noted that comprehensive insights, economic assessments, and future forward guidance would be unveiled soon. The monetary authority confirmed that the final decisions finalized by the Monetary Policy Committee will be publicly announced at 10:00 AM on October 7.
Tracing the Policy Trajectory Since February 2023
A look at the historical trajectory shows that the Reserve Bank of India last delivered a 0.25 percent rate hike in February 2023, lifting the benchmark repo rate to 6.50 percent. Following that move, the central bank held rates completely unchanged throughout 2023-24. Subsequently, a cycle of rate reductions began in 2025, bringing the current repo rate down to 5.25 percent. While a significant majority of surveyed economists and bankers anticipate an imminent rate hike during this round of discussions, expert opinion remains notably divided regarding whether an official shift in the policy stance will accompany the decision.
Arguments for Holding the Repo Rate Steady
In contrast to the broader consensus predicting immediate tightening, some institutional analysts anticipate a pause. Bank of Baroda Chief Economist Madan Sabnavis projected that the central bank might maintain the repo rate at its prevailing level for now. Sabnavis observed, "हम मानते हैं कि अगला ब्याज दर चक्र 0.50-0.75 प्रतिशत की बढ़ोतरी वाला होगा, लेकिन हमारा मानना है कि अक्टूबर की समीक्षा में रेपो रेट पर विराम ही रहेगा।" This perspective suggests that while an eventual rate-hiking phase totaling 0.50 to 0.75 percent may be on the horizon, the monetary authority could opt to observe conditions from the sidelines during the October meeting.
Projections Point to Rate Rises in October and December
Taking a distinctly hawkish stance, investment banking firm Goldman Sachs highlighted that the minutes of the August policy meeting revealed far more restrictive leanings than the formal resolution suggested. Committee members acknowledged that inflationary impulses stemming from elevated food and energy costs carry the distinct risk of generating second-round spillover effects. Policymakers indicated that if price pressures prove broader and more persistent, policy intervention would become inevitable.
Outlining its forecast, Goldman Sachs stated in its report, "इसलिए अब हमारा अनुमान है कि आरबीआई अक्टूबर और दिसंबर में रेपो रेट में 0.25-0.25 प्रतिशत की बढ़ोतरी कर सकता है। इसके साथ एमपीसी अपने रुख को 'तटस्थ' से बदलकर 'संतुलित सख्ती' या 'समायोजन वापस लेने' वाला कर सकती है।" Such successive adjustments would progressively raise borrowing costs across the banking system through the final quarter of the year.
