After the government announced that the Consumer Price Index (CPI) inflation for August 2026 increased to 4.8% year-on-year (YoY), HSBC Global Investment Research, in its forecast, predicted that the Reserve Bank of India (RBI) would raise policy rates (repo rate) by 25 bps twice, once during its October meeting and again in December, through its Monetary Policy Committee (MPC), pushing up the overall rate to 5.75% from 5.25%.
That said, a 4.8% inflation rate is still far below the RBI’s upper tolerance limit of 6%, which could be a factor prompting the RBI to increase the repo rate. The fact that inflation has been rising consistently for the last few months, makes it increasingly likely that the RBI will decide to hike the repo rate.
