Economists expect a further rate hike in the December, after the <a href="https://www.mid-day.com/business/business-news/article/rbi-mpc-rbi-hikes-repo-rate-to-55-per-cent-rules-out-rate-cuts-in-near-term-23653790" target="_blank" rel="none noopener">Reserve Bank of India (RBI) on Wednesday raised its repo rate by 25 basis points</a> to 5.5 per cent, its first rate increase in nearly four years.
In his address, RBI Governor Sanjay Malhotra said given the current conditions, rate cuts are off the table in the near term and the apex bank changed its policy stance to 'calibrated tightening.'
"We see room for another rate hike of 25 basis points in December," Dipti Deshpande, Senior Director and Principal Economist, Crisil said.
She said the RBI Monetary Policy Committee's (MPC) decision to change the monetary policy stance to 'calibrated tightening' and raise the policy repo rate by 25 basis points "is in line with our expectations and reflects a precautionary response to an increasingly challenging inflation environment."
Market analysts and economists had anticipated a rate hike during the October bi-monthly policy meeting due to the inflationary pressures and elevated crude oil prices amid the ongoing West Asia crisis. &nbsp; Similarly, Sakshi Gupta, Principal Economist, <a href="https://www.mid-day.com/business/business-news/article/hdfc-bank-appoints-anup-bagchi-as-new-md-and-ceo-after-rbis-approval-23652977" target="_blank" rel="none noopener">HDFC Bank</a> said, "We expect cumulative rate hikes by the central bank to the tune of another 50-75bps over the next few months. The risk of a more aggressive rate hike cycle hinges on whether the current West Asia conflict and rise in oil prices continue to linger on for longer. We expect inflation to average at 5.4 per cent in FY27 with 6.3 per cent expected in the current quarter. On growth, we hold on to our expectations of 7.1 per cent growth in FY27."
According to Radhika Piplani, Chief Economist, Motilal Oswal Financial Services said the shift in the policy stance from neutral to calibrated tightening signals the central bank intends to tighten both banking system liquidity and policy rates to contain inflation.&nbsp;
"We expect a further 75bps of tightening in this cycle, taking the repo rate to 6.25 per cent. This includes a 25bps hike in December, which markets have already largely priced in now," Piplani said.
Apoorva Javadekar, Chief Economist, Shriram Group, said the hawkish stance keeps the focus on the rate hike in December.&nbsp;
"The upward revision to inflation forecasts sets the stage for a December hike. On growth, the <a href="https://www.mid-day.com/business/business-news/article/world-bank-upgrades-indias-gdp-growth-forecast-to-71-per-cent-for-fy27-23653647" target="_blank" rel="none noopener">upward GDP revision</a> carries some downside risk, as the rate hike itself may weigh on private consumption, which is increasingly credit-financed," Javadekar said.
The next meeting of the MPC is scheduled for December 2 to 4, 2026&nbsp;
<h2>What is hawkish stance?</h2>
Central Banks across the globe, including Reserve Bank of India, monitor the inflation situation and to contain the inflationary pressure, increase the interest rates. This helps to reduce the liquidity or the money that is readily available in the market, thus reducing the spendings and in turn the inflation. However, this move affects businesses as funding is not readily available and the cost of borrowing becomes higher. So, the central banks while adopting a hawkish stance prioritise price stability over short-term economic growth.
<h2>RBI hikes repo rate&nbsp;</h2>
Earlier, the RBI had increased the repo rate for the first time since February 2023 and had kept the repo rate unchanged at 5.25 per cent since December 2025.
"After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, the MPC voted unanimously to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 bps to 5.50 per cent," RBI Governor Sanjay Malhotra said after the <a href="https://www.mid-day.com/business/business-news/article/rbi-begins-mpc-meeting-on-october-5-analysts-expect-rate-hike-for-first-time-since-2023--23653440" target="_blank" rel="none noopener">three-day MPC meeting</a>.&nbsp;
The MPC noted that given the challenging global environment, there can be only rate hikes or pauses.
"It underscored that given the current conditions, rate cuts are off the table in the near term and policy action ahead can only be a rate hike or a pause, depending on the evolving conditions and the outlook. The duration and extent of the rate hike cycle would be contingent on the actual growth-inflation developments and outlook, especially that of underlying inflation, the extent of broadening of price pressures and second round effects of the supply shock, as also the impact of demand impulses," Malhotra said.

Amid the mounting inflationary pressures, economists expect RBI to increase the repo rate to 5.75 per cent in December

Economists expect RBI to increase repo rate by 25 basis points in December 

RBI will ensure stability in rupee, help find its correct value: RBI Governor Sanjay Malhotra

Economists largely believe that RBI is likely to hike the repo rate by 25 basis points to 5.75 per cent in December, in a bid to contain inflation

RBI MPC: Economists expect further repo rate hike in December

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