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The Reserve Bank of India’s Monetary Policy Committee (MPC) is scheduled to meet from October 5 to 7. The three-day meeting will conclude with RBI governor Sanjay Malhotra announcing the key policy decisions. He is expected to target a policy decision that aims to balance growth and inflation despite the ongoing global headwinds.
The October meeting is the fourth bi-monthly policy review of the RBI’s in the current financial year (FY27). This meeting is coming against the backdrop of elevated crude prices and rising inflation.
Inflation rises ahead of October policy
India’s retail inflation increased to 4.82% in August from 4.45% in July. Food inflation also increased, adding to concerns around the inflation trajectory ahead of the MPC meeting.
The August inflation reading was the highest in at least eight months. Prices of several food items, including sugar and onion, rose sharply during the month.
Nomura see 50 bps of RBI rate hikes by December
Japanese brokerage firm Nomura expects 25bps hikes in October and December to a terminal rate of 5.75%. “We expect the cyclical pressures from food and energy prices to push up inflation over the next six months, but as they dampen demand, inflation should return to target.
Nomura forecast CPI inflation at 5.2% in FY27, before easing to the midpoint target of 4.0% in FY28.
Nomura also believes that “the RBI’s monetary policy is at an inflection point.”
On GDP growth Nomura said, “Growth is steady now, but our proprietary Nomura India Composite Leading Index (NICLI), which leads non-agricultural GDP growth by one quarter, has fallen to 99.8 in Q4 2026 from 100.5 in H1 2026, signalling the possibility of below-trend growth.”
RBI MPC Aug meet : Rates maintained at 5.25%
The RBI MPC meeting is a bi-monthly meeting held to discuss the state of the economy. The RBI MPC has already met in April, June and August.
At its August meeting, the 6-member MPC unanimously kept the policy repo rate unchanged at 5.25% and retained its neutral stance. The Standing Deposit Facility (SDF) rate was kept at 5%, while the Marginal Standing Facility (MSF) and Bank Rate remained at 5.5%.
The RBI had projected FY27 real GDP growth at 6.7%. India’s real GDP growth surprised higher at 7.8% year-on-year in Q2.
TOPICSCrude oilECONOMYeconomy newsGDP growthinflationRBIReserve Bank of India + 0 MoreThis article was first uploaded on September twenty-eight, twenty twenty-six, at eighteen minutes past six in the evening. © IE Online Media Services (P) Ltd