RBI flags widening inflation risks, puts rate cuts on ice
Economic Times 1 hr ago·21 Oct 2026, 7:52 pm
The Reserve Bank of India’s Monetary Policy Committee lifted the benchmark repo rate by 25 basis points, citing a broadening of inflation pressures. The central bank noted that many commodity price indices are now above the 4% mark and that external supply‑side shocks are feeding into price expectations.
Higher borrowing costs affect both consumers and businesses, potentially squeezing profit margins and slowing credit‑driven growth. Investors typically see a tighter monetary stance reflected in lower equity valuations, especially for sectors that depend heavily on financing such as real estate and autos. The move also signals that any anticipated rate cuts are now on hold.
Market participants should keep an eye on upcoming consumer‑price data, the RBI’s next policy meeting minutes, and global commodity price trends. Corporate earnings reports will also reveal how firms are coping with the increased cost of capital, which could shape short‑term market direction.
Excerpt from Economic Times
RBI's Monetary Policy Committee raised the benchmark repo rate by 25 basis points to address rising inflation concerns. Governor Sanjay Malhotra indicated a generalisation of inflation, with many commodities exceeding 4% inflation. Deputy Governor Poonam Gupta highlighted the influence of external supply-side shocks…Read the original at Economic Times
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- Category: Economy.
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