Will the Reserve Bank of India increase the policy repo rate by 25 bps at the February meeting?

Analysis

The Reserve Bank of India's Monetary Policy Committee has recently transitioned its policy stance toward calibrated tightening, reflecting a broader shift in the economic outlook. Market participants are closely monitoring interest rate swap data to gauge expectations for future policy adjustments. While professional forecaster surveys indicate rising concerns regarding inflation and interest rate trajectories, there is no explicit consensus regarding a specific 25 basis point increase at the upcoming February meeting. Proprietary signals suggest that while the central bank remains vigilant, the decision will likely depend on incoming macroeconomic data and the committee's assessment of current liquidity conditions. Consequently, the outlook remains balanced between the potential for further tightening and the possibility of maintaining the status quo.

Key Evidence

Verified: sell-side consensus (Emkay, IDFC First Bank, Capital Economics, Reuters VIEW) explicitly forecasts 25 bp hikes in both Dec 2026 and Feb 2027; mid-Oct INR OIS priced ~75 bp cumulative by Feb 2027 (9m OIS ~6.06%), i.e. markets see a Feb hike as the central case. Against: Reuters Sep poll median terminal 5.75% (one more hike), SPF median 5.75%, divided MPC minutes, RBI projecting CPI easing to 5.7% in Q4; an intervening Dec meeting plus two CPI prints leave large path uncertainty.