RBI begins rate meeting as economists weigh possible hike

The Reserve Bank of India’s six-member Monetary Policy Committee began a three-day meeting on October 5, with its decision on the benchmark repo rate scheduled for October 7. The rate stood at 5.25% before the meeting. A 25-basis-point increase, which would take it to 5.50%, was widely expected by economists cited in the reports, but the committee had not announced a decision. The meeting comes as inflation has risen and energy prices have increased. Consumer price inflation was reported at 4.82% in August, up from 4.45% in July. Reports attributed the rise to food and energy pressures. Crude oil prices above $100 a barrel, a weakening rupee and tighter monetary policy among major global central banks were also cited as factors shaping the debate. The forecasts were not unanimous. Some economists and market participants argued that the MPC should raise rates to address inflation risks, including the possibility that price pressures could spread beyond food. A PTI poll of 16 economists and bankers found that a majority expected an increase, while views were divided on whether the committee would change its policy stance.