RBI May Hike Repo Rate to 5.50 Percent Amid Rising Inflation

The Reserve Bank of India (RBI) may increase the repo rate by 25 basis points in October, which could lead to higher monthly payments for home and car loan borrowers.

Rising crude oil prices, higher inflation, and global uncertainty have increased the possibility of a rate hike. The RBI's Monetary Policy Committee (MPC) will meet from October 5 to 7, 2026.

According to Reuters, nearly 60 percent of economists expect the RBI to raise the repo rate by 25 basis points in October, which would take it to 5.50 percent. Japanese brokerage Nomura also expects a 25 basis point hike in both October and December, which would result in a repo rate of 5.75 percent by the end of 2026.

Higher inflation is a major concern for the central bank, with India's retail inflation rising to 4.82 percent in August from 4.45 percent in July. Higher crude oil prices also pose a risk due to India's heavy dependence on imported oil, which can raise fuel and transport costs.