Archive · 24 Sep 2026
RBI Rate Hike Debate Intensifies as Inflation Risks Rise
The Reserve Bank of India has not changed its main interest rate, which is currently 5.25%.
Experts are debating whether the bank will raise it soon.
S&P Global Ratings expects one small increase to 5.5%.
Fitch Ratings expects two increases, taking the rate to 5.75% in early 2027.
SBI Research also recommends two increases, in October and December.
The experts are concerned that strong demand and higher oil prices could push prices up.
S&P and Fitch both raised their forecasts for India’s economic growth.
The Reserve Bank of India will review its policy at a meeting scheduled for October 5-7, 2026.
The Reserve Bank of India has held the repo rate at 5.25% for four consecutive meetings since August.
S&P Global Ratings expects one 25-basis-point hike to 5.5% during the current fiscal year.
Fitch Ratings projects hikes to 5.5% in October and 5.75% in early 2027.
SBI Research recommends 25-basis-point hikes in both October and December.
Higher growth, crude oil prices, inflation and geopolitical risks are driving expectations for tighter monetary policy.
- Who
- The Reserve Bank of India, its Monetary Policy Committee, S&P Global Ratings, Fitch Ratings and SBI Research.
- What
- Analysts are forecasting possible RBI repo-rate increases from the current 5.25%.
- When
- The Monetary Policy Committee is scheduled to meet from October 5-7, 2026; forecasts also cover early 2027.
- Where
- India.
- Why
- Strong economic growth, persistent inflation, higher crude oil prices, supply risks and geopolitical uncertainty could increase price pressures.
One-Hike Outlook
Two-Hike Outlook
Expected rate path
One-Hike Outlook
S&P Global Ratings expects the Reserve Bank of India to raise the repo rate once by 25 basis points to 5.5% during the current fiscal year.
Two-Hike Outlook
Fitch Ratings expects two increases—to 5.5% in October and 5.75% in early 2027—while SBI Research recommends hikes in October and December.
Growth and monetary policy
One-Hike Outlook
S&P raised its FY27 growth forecast to 7% but expects growth to moderate in the second half as the effects of GST rationalisation and income-tax cuts fade.
Two-Hike Outlook
Fitch raised its FY27 growth forecast to 6.9% and still expects strong demand and rising prices to require additional tightening.
Inflation risks
One-Hike Outlook
S&P expects FY27 inflation to average 5.1%, slightly above the Reserve Bank of India’s 5% forecast, supporting a single hike.
Two-Hike Outlook
Fitch and SBI Research emphasize stronger near-term inflation risks, including crude oil prices, adverse supply developments and higher input costs.
- Current repo rate
- 5.25%
- Other listed RBI rates
- Bank Rate and Marginal Standing Facility Rate: 5.50%; Reverse Repo Rate: 3.35%
- S&P forecast
- One 25-basis-point hike to 5.5% during the current fiscal year
- Fitch forecast
- A hike to 5.5% in October, followed by a hike to 5.75% in early 2027
- SBI Research recommendation
- 25-basis-point hikes in October and December
- FY27 growth forecasts
- S&P: 7%; Fitch: 6.9%
- Inflation outlook
- S&P expects FY27 inflation to average 5.1%; Fitch expects retail inflation to reach 5.5% in December