Indian The three-day meeting of the Monetary Policy Committee (MPC) of the Reserve Bank (RBI) started on Monday. Due to increasing tension in West Asia, the risk of inflation has also increased. In such a situation, the MPC of RBI may decide to increase the repo rate by 0.25 percent this time. According to a PTI survey conducted among economists and bankers regarding possible decisions in the MPC meeting, the decision to increase the policy interest rate during the monetary policy review will also reflect a change in the policy stance.
Decisions will be announced on October 7 at 10 am
The RBI has kept its monetary stance unchanged for a long time after starting to cut rates in 2025. RBI said in a social media post, “Insights, assessments and further direction will be revealed soon.” Along with this, the central bank said that the decisions taken by the Monetary Policy Committee will be announced on October 7 at 10 am.
The last time the repo rate was increased by 0.25 percent was in February 2023.
Let us tell you that the Reserve Bank of India had last increased the repo rate by 0.25 percent to 6.50 percent in February 2023. After this, it did not make any change in the repo rate during 2023-24. Then, the process of reducing the repo rate started in 2025 and the current repo rate is at 5.25 percent. Most of the economists and bankers included in PTI’s survey feel that RBI MPC will increase the repo rate this time. However, experts’ opinions are divided on the issue of change in policy stance.
Will RBI keep the repo rate stable at the current level?
Meanwhile, Bank of Baroda Chief Economist Madan Sabnavis said that the Reserve Bank can maintain the repo rate at the current level. He said, “We believe that the next interest rate cycle will be of 0.50-0.75 percent increase, but we believe that the repo rate will remain on pause in the October review.”
‘RBI will increase repo rate not only in October but also in December’
According to a report by investment bank Goldman Sachs, the minutes of the August MPC meeting were much more hawkish than the policy statement. Members acknowledged that inflation resulting from high food and fuel prices could have second-round effects. They indicated that policy action may be needed if price pressures become widespread and more sustained. Goldman Sachs said in its report, “Therefore, we now estimate that RBI may increase the repo rate by 0.25-0.25 percent in October and December.” With this, the MPC can change its stance from ‘neutral’ to ‘balanced tightening’ or ‘withdrawal of accommodation’.
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