RBI Rate Hike Odds Rise as US Fed Tightens

The US Federal Reserve has raised its benchmark interest rate by 25 basis points to 3.75-4%, sparking expectations that the Reserve Bank of India (RBI) may follow suit in October.

The Fed's decision came amid persistent inflation, resilient economic growth, and elevated energy prices in the wake of the West Asia crisis.

Economists now expect the RBI to begin tightening rates as early as its October meeting, with Axis Capital predicting a 25 basis point hike in both October and December, taking cumulative tightening to 50 basis points by year-end.

The global monetary policy cycle is turning increasingly hawkish, with the Fed joining the European Central Bank (ECB), Bank of Japan (BoJ), Reserve Bank of Australia (RBA), Reserve Bank of New Zealand (RBNZ), and Norges Bank in tightening paths.