NEW DELHI: Most economists are betting on a rate hike by the monetary policy committee in Oct in the wake of acceleration in inflation, massive liquidity and central banks increasing interest rates in the US and Japan, a poll by TOI has shown.The poll of a dozen economists showed that a majority expects repo rate to rise by 25 basis points (100 basis points equal a percentage point), the first increase since Feb 2023 when RBI had opted for a hike to combat the post-pandemic spike in inflation, before it started gradual easing between Feb and Dec 2025. Although MPC kept the repo rate unchanged at 5.25%, economists expect rates to rise by 50-75 bps in this financial year.During the second quarter, average inflation will be around 20 bps higher than RBI’s estimate of 4.7%, Kotak Mahindra Bank chief economist Upasana Bhardwaj said. SBI chief economic adviser Soumya Kanti Ghosh cautioned that inflation is getting generalised. “It’s time to build moats through a 25 bps hike in Oct and Dec MPC each, and then to pause and take stock with upcoming data.”Crisil chief economist D K Joshi said space is shrinking for monetary policy to remain in wait-and-watch mode and a tightening cycle is expected to begin soon. “The upcoming policy is likely to be more hawkish and the probability of change in stance or rates or both has risen. We expect 25 bps hike in 2026,” he said.IDFC First Bank chief economist Gaura Sengupta said the probability of rate hike is high in Oct as inflation is expected to peak in the next quarter. “FY27 retail inflation is expected to average 5% (with upside risk). The rate hike cycle is expected to be shallow, with cumulative hikes of 50-75 bps,” she said.ICRA Ratings chief economist Aditi Nayar said if crude oil prices remain elevated in the run-up to the upcoming MPC meeting, then the expected rate hike could be advanced to Oct, while estimating a 50 bps increase. Quant Eco Research economist Yuvika Singhal shared the same view.Emkay Global’s Madhavi Arora and ICICI Bank expect it to range between 50 and 75 bps, depending on how energy prices move.CareEdge Ratings chief economist Rajani Sinha said MPC will take note of rising govt bond yields as well, along with the broadening of price pressures.There are also a few who believe that the MPC led by RBI governor Sanjay Malhotra will maintain status quo and keep a close watch on the numbers. India Ratings chief economist D K Pant said there is a case for RBI to undertake rate hike, although it may turn counterproductive in Oct, as the liquidity situation is far from stabilising. “The leading indicator in the upcoming meet will be the liquidity situation, instead of headline inflation figure. There is a high possibility that RBI will maintain the status quo,” he said.“Only by Dec, we will have a clear picture of the inflation cycle, which could then trigger a hike of 25-50 bps,” said Bank of Baroda’s Madan Sabnavis. HDFC Bank principal economist Sakshi Gupta shared the same view.
