RBI may end rate-cut cycle with first hike since February 2023
Economists and bankers expect the Reserve Bank of India to end its interest rate-cut cycle with a 25-basis-point hike in October. This shift is driven by rising inflation risks and input costs, despite the economy showing resilience.
Why it matters
A shift in monetary policy in India's major economy impacts credit growth, borrowing costs for corporations, and broader market stability.
MUMBAI: The era of falling interest rates that began in February 2025 is likely to end this week, with bankers and economists expecting RBI to raise the repo rate by 25 basis points. The last increase came in February 2023, ending a tightening cycle that began after Russia's invasion of Ukraine.In February 2025, RBI cut rates by 25 basis points after a five-year pause, followed by 25bp in April, 50bp in June and 25bp in December, taking the repo rate to 5.25%.It has held off on tightening despite inflation risks from the West Asia conflict and weaker farm output, betting that structural changes and stronger corporate and bank balance sheets could absorb margin pressure.
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