The RBI Monetary Policy Committee will meet from October 5 to 7, 2026, to review interest rates. Many experts expect a 25 basis point hike to 5.50% due to rising inflation. Rajeev Sharan said, “The case for moving higher has strengthened.” Investors are watching closely for cues on future growth.
RBI MPC meeting October 2026: The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) is scheduled to meet from October 5 to 7, 2026, to review the country’s economic and monetary conditions.
The central bank is set to announce its policy decision on October 7. The outcome of the meeting will be closely watched by investors and market participants for cues on the RBI’s interest-rate stance and its outlook on inflation and economic growth.
The central bank kept the repo rate unchanged at 5.25% in August 2026, maintaining the policy rate at its existing level. The central bank also retained its neutral policy stance, signalling a balanced approach to the evolving inflation and growth outlook.
Economists are expecting the RBI to potentially raise the repo rate by 25 basis points, taking it to 5.50%. If implemented, this would mark the first rate hike since February 2023, signalling a possible shift towards a tighter monetary policy stance amid evolving inflation and economic conditions.
Will RBI announce a 25bps rate hike?
Sugandha Sachdeva, Founder of SS WealthStreet, believes that the the RBI is likely to raise interest rates by 25 basis points next week, amid rising inflation and persistent pressure on the rupee. Inflation at 4.82% is above the RBI’s 4% target, while the currency’s slide towards ₹97 against the dollar adds to imported inflation risks
Sachdeva added that higher US Treasury yields and tightening by the US Fed and other major central banks could provide further grounds for a hike, helping support the rupee and limit a further narrowing of India’s interest-rate differential with the US.
Rajeev Sharan, Head of Research, Brickwork Ratings, also highlighted that after holding through 2026, the RBI faces growing pressure to raise rates at its October review, and a 25 basis point hike to 5.50% is now a real possibility, which would be the first increase since early 2023.
“The case for moving higher has strengthened: retail inflation has climbed to 4.82% and is set to peak around the festive quarter, crude is holding above USD 100, the rupee has slipped past 96, and the Fed's recent hike has narrowed the rate gap and added to currency pressure. On the other side, inflation is still within the target band and price pressures are not yet broad-based, which could persuade the committee to hold once more with a firmly hawkish tone. Either way, a rate cut is off the table for now, and the next move is more likely up than down,” said Sharan.
What does RBI rate hike means for the Indian stock market?
Srivasatava said that an unexpected rate hike or a distinctly hawkish policy communication could create short-term pressure on the Nifty and Sensex by raising the cost of capital and potentially affecting credit demand and corporate financing costs.
“The market may increasingly differentiate between businesses on the basis of leverage, earnings visibility and pricing power. A rate hike, if delivered, could therefore create short-term volatility while reinforcing the RBI’s focus on maintaining macroeconomic and currency stability. For the October series, the policy outcome and subsequent commentary will be crucial in determining whether the market consolidates further or resumes its recovery,” she said.
Meanwhile, Sachdeva believes that the impact on equities is likely to be mixed. While the rupee could gain some stability, higher borrowing costs during the festive season could constrain consumption and investment, particularly amid weak monsoon conditions. Interest-sensitive sectors such as real estate and automobiles could face pressure on demand and profitability, although the earnings impact would depend on how quickly higher rates transmit into lending costs.
She further added that a quarter-point hike is already priced in, so the RBI’s guidance could matter more than the decision itself. A hawkish stance signalling further increases or a prolonged period of high rates would weigh on sentiment. Conversely, a one-off hike accompanied by balanced guidance could remove uncertainty and be received relatively positively by the markets.