MUMBAI
The Reserve Bank of India increased its benchmark repo rate by 25 basis points to 5.5% on Wednesday, ending a four-year pause on rate hikes. The decision reflects mounting inflation and strong economic growth, with the RBI adopting a new 'calibrated tightening' stance that signals measured but continued policy action.
Abhijit Surya, Senior APAC Economist at Capital Economics, views the move as hawkish and expects additional 25 basis point increases in December and February, which would push the terminal rate to 6%—above the consensus forecast of 5.75%.
Aastha Gudwani, India Chief Economist at Barclays, takes a more neutral view. She interprets 'calibrated tightening' as a signal against consecutive hikes and expects only one more 25 basis point rise through the fiscal year end, likely in February 2027.
Aditi Nayar, Chief Economist at ICRA, expects another hike in December 2026 as inflation hardens from a poor monsoon, rising commodity prices and an unfavorable base effect. She does not foresee further tightening in 2027.
Sakshi Gupta, Principal Economist at HDFC Bank, interprets 'calibrated tightening' as the start of a sustained cycle and forecasts an additional 50 to 75 basis points of hikes ahead. She flagged West Asia tensions and elevated oil prices as risks that could force more aggressive tightening.
Krishna Bhimavarapu, APAC Economist at State Street Investment Management, called the initial 25 basis point move sensible and projects 100 basis points of cumulative tightening over the current cycle, with the ultimate magnitude dependent on the global energy shock, food inflation dynamics and the pace of global central bank tightening.
Dhiraj Nim, Economist and FX Strategist at ANZ Research, characterized the policy as clean and effective, signaling higher rates ahead with the eventual peak dependent on second-order inflation impacts.
