SBI Research has kept its forecast of a 50-basis-point RBI repo rate hike in December, citing persistent inflation, elevated crude oil prices and the central bank's shift toward tighter policy, even though the RBI has ruled out near-term rate cuts. Its analysis of the October MPC minutes shows Governor Sanjay Malhotra focusing more on future risks and the possibility of further tightening. The RBI raised the repo rate by 25 basis points to 5.50% earlier this month, and the report outlines two December options: a 50-basis-point hike to 6%, or a 25-basis-point hike to 5.75% with an asymmetric widening of the LAF corridor. The number of commodities making up 75% of the CPI's weighted contribution rose from 25 in August to 31 in September, showing price pressures spreading, and inflation is expected to peak below 6.5% in November. The next MPC meeting is scheduled for December 2-4.
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SBI Funds Management says the Reserve Bank of India (RBI) may need to raise its repo rate to at least 6.25% to contain inflation risks, after the RBI lifted it by 25 basis points to 5.50% earlier this month. That level would imply another 75 basis points of increases, though the report gives no timeline. Retail inflation rose to 5.54% in September from 4.83% in August, while wholesale inflation climbed to 11.39% from 9.92%. The fund house says headline CPI remains about 120 basis points above the 4% target, and warns that high crude prices, possible food inflation and strong domestic demand could push inflation above the RBI's 6% upper tolerance limit for two consecutive quarters. It also notes that surplus banking liquidity could weaken the effect of rate hikes, and that rate cuts are off the table.
- RBI may need to raise repo rate to 6 . 25 % as inflation risks persist : SBI Mutual Fund
In its October 2026 Market Outlook, SBI Funds Management says the RBI may need to lift its repo rate to at least 6.25% to contain inflation risks, after raising it by 25 basis points to 5.50% earlier this month. That implies another 75 basis points of hikes with no timeline given, and the fund sees the near-term path as either a hike or a hold, with rate cuts off the table. Retail inflation rose to 5.54% in September from 4.83% in August and wholesale inflation to 11.39% from 9.92%, while the FY27 CPI forecast of 5.20% sits about 120 basis points above the 4% target. The RBI projects inflation at 6% in the third quarter and 5.7% in the fourth quarter of FY27, and the fund warns that elevated crude prices, food inflation and strong domestic demand could push it above the 6% upper tolerance limit for two consecutive quarters. It also cautions that surplus banking liquidity could weaken the effect of rate hikes, and the RBI's next Monetary Policy Committee meeting is scheduled for December 2-4.
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A YES Bank report says the gap between Indian and G7 interest rates matters for monetary policy, as it helps attract foreign debt capital while the US Federal Reserve may continue its rate-hiking cycle. The minutes of the RBI's October MPC meeting flagged growing inflation risks, with the Q3 FY27 inflation projection at 6 per cent, the top of the 2-6 per cent tolerance band. September data showed broader price increases, household inflation expectations rose and businesses were passing higher input costs on to consumers, although demand pressures remained subdued. India still posted GDP growth of 7.8 per cent in Q1 FY27, while the report flagged risks from energy prices, supply-chain pressures and El Nino. YES Bank forecasts a cumulative 50 basis-point repo rate increase, with 25-basis-point hikes in December and February, but this is the bank's own forecast rather than an RBI decision.
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A YES Bank report argues that keeping a certain gap between India's and G7 interest rates matters for attracting foreign debt capital, especially as the US Federal Reserve is expected to keep hiking rates. The RBI's inflation projection for Q3 FY27 reached 6%, the upper limit of its 2–6% tolerance band, and September data showed broader price increases, rising household inflation expectations and businesses passing higher input costs on to consumers. India's GDP grew 7.8% in Q1 FY27, while demand pressures remained subdued and the output gap appeared to be narrowing. YES Bank forecasts a cumulative 50-basis-point repo rate hike, with 25 basis points in December and 25 in February, but notes this is its own forecast rather than an RBI decision. The report also flags risks from higher energy prices, supply-chain pressures and El Niño.
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