EY Predicts RBI Will Hike Repo Rate in October

Ernst & Young reports a strengthened case for the Reserve Bank of India to implement a 25 basis point hike in its repo rate during its upcoming meeting on October 7, 2026. The professional services firm cites a combination of higher crude oil prices, a weaker rupee, and tighter global financial conditions as the primary drivers for the expected move.

Persistent inflationary pressures are fueling the prediction, with trends in the Wholesale Price Index and Consumer Price Index linked to supply-side factors and a deficient monsoon caused by El Niño. Additionally, the report flags high money supply growth, noting that average M3 growth reached 15.0 per cent between June and August 2026.

The Reserve Bank of India's Monetary Policy Committee will weigh these pressures against a strong domestic economy, which saw real GDP growth of 7.8 per cent in the first quarter of FY27. The central bank is also considering a recent 25 basis point rate hike by the United States Federal Reserve. In August 2026, the bank had maintained a neutral stance with a repo rate of 5.25 per cent.