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Informist, Wednesday, Oct. 7, 2026

MUMBAI – Following is a compilation of first views of economists and market experts on the Reserve Bank of India's fourth bi-monthly monetary policy statement for the financial year 2026-27 (Apr-Mar) detailed Wednesday:

BANKERS

BRAJESH KUMAR SINGH, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, CANARA BANK

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We welcome the RBI's calibrated policy response, with the 25 basis point repo rate hike to 5.50%, which comes amid heightened inflationary pressures arising from the ongoing war in West Asia. This move is aimed at anchoring inflation expectations while maintaining macroeconomic stability. Although the increase in the repo rate will play some part in affecting funding costs and interest rates, the upward revision of FY27 real GDP growth to 7.1% reflects good growth momentum and healthy credit demand, making for a conducive environment for the banking system. Canara Bank is committed to providing timely and cost-effective credit support to households, MSMEs, and other enterprises as they continue to grow in this phase. 

(Priyasmita Dutta)

LAKSHMANAN V., GROUP PRESIDENT & HEAD OF TREASURY, FEDERAL BANK

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The MPC outcome on the rate hike was in line with the market expectations. Though most people did not expect the stance change, the markets had built in a clear hawkish tone in the price and, thus, the MPC outcome did not see any substantial move in the markets. On the liquidity measures, too, RBI left enough room for them to act basis the need.

(Divya Moolayattil)

PRALAY MONDAL, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER, CSB BANK

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The repo rate hike is a prudent step in an uncertain global scenario. The underlying stress in inflation for the next few quarters warranted some steps in time to prevent further escalation. A rate hike would not be effective without calibrating the operative rate to repo rate. However, RBI is expected to maintain adequate liquidity for smooth functioning of the money markets.

(Meera Nair)

V.R.C. REDDY, TREASURY HEAD, KARUR VYSYA BANK

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RBI has delivered a decisively hawkish policy. A 25-basis-point repo hike and a surprise shift to "calibrated tightening" clearly signal that rate cuts are off the table and further hikes remain firmly in play. The governor's emphasis on elevated crude prices and heightened global volatility reinforces a cautious but firm stance.

The macro projections add weight to the message. GDP growth has been raised to 7.10%, providing the RBI with policy room, while FY27 CPI at 5.20% suggests that the inflation battle is far from over. Resilient growth, sticky inflation and a tightening stance create a clear bias towards further rate hikes. We see the terminal rate moving towards 6% by March 2027, with scope for one additional hike if global risks intensify.

On liquidity, the absence of a CRR hike and OMO sale suggests that the RBI is comfortable continuing with VRRRs, buy sell swaps and ongoing sterilisation.

For bonds, global yields and crude are now the key signposts. If both peak, the 7.24-7.25% zone in the 10-year G-sec looks attractive, a renewed global shock could push yields towards the 7.35-7.40% peak corridor before value emerges.

A clearly hawkish policy that raises terminal rate expectations on the back of resilient growth and higher inflation. Liquidity conditions, global yields and crude will determine how far the tightening cycle travels.

(Meera Nair)

ECONOMISTS

ANITHA RANGAN, CHIEF ECONOMIST, RBL BANK

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The RBI monetary policy delivered a 25 basis points hike, in line with expectations, with a unanimous vote. The RBI also changed its stance to 'calibrated tightening' on a four-two vote, which indicates that the prospective cycle is on the hiking side. The RBI has revised its inflation estimates upwards, to 5.6-6% from Q3 through Q1 FY28, which is above the 4% target. Growth has also been revised upwards to 7.1% for the year, with strong momentum into Q2 at 7.2%, moderating to 6.9% and 6.8% thereafter. This reflects robust growth despite geopolitical and weather-related shocks.

The key takeaway was the RBI's emphasis that current account deficit risks are elevated. The overall tone of the policy continued to acknowledge risks, both external and domestic. On the domestic side, these are largely led by El Nino, which is expected to extend into the rabi season.

The RBI did not announce any liquidity measures but stated that its objective is to keep the weighted average rate close to the policy rate. We expect liquidity measures to continue to moderate system liquidity. The RBI's observation that "transmission in the credit market reflected dissimilar movements in deposit and lending rates during July-August" suggests a preference for tighter liquidity, which is consistent with a calibrated tightening cycle in which liquidity is not in surplus.

This is a policy with a clear tightening bias, marking the start of a tightening cycle. The RBI is likely to pursue liquidity tightening and rate hikes in tandem, with at least 75 basis points more (cumulative 100 bps), to stay in sync with rising global yields. This would support the currency and also help attract capital flows, especially on the debt side.  

(Arya S. Biju)

GAURAV KAPUR, CHIEF ECONOMIST, INDUSIND BANK

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The outcome of the October MPC meeting was along expected lines. In the backdrop of heightened risks to CPI inflation, resilient and stronger-than-expected growth despite persistent energy shock and tightening financial and monetary conditions in key advanced economies, it was highly likely that monetary tightening would be pursued. Reflecting on evolving growth and inflation conditions, the RBI revised its baseline forecast of real GDP and inflation upwards. With economic growth resilient and financial conditions turning more conducive for growth following a significant increase in surplus liquidity in the banking system, the MPC has thus chosen to focus on ensuring price stability, especially as household inflation expectations for near-term and one-year ahead are rising.

Basis these baseline forecasts, it is now highly likely that the repo rate would be raised in the next two MPC meetings of December and February 2027 in order to ensure that the real repo rate is calibrated to account for inflation rising to the upper end of the tolerance band of 6% and staying well above the target of 4% over the next three quarters and the next fiscal year. 

(Arundathi A R)

INDRANIL PAN, CHIEF ECONOMIST, YES BANK

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As expected, with the uncertain geopolitical developments that have kept oil prices elevated and given that the inflation numbers have registered an upward trend, it was prudent for the RBI to have started its hiking journey. The increase in the growth outlook indicated that the fear of growth sacrifice due to a rate hike cycle is now low. A bit surprising was the change in stance to 'calibrated tightening', despite an acknowledgement that currently there are 'limited signs of supply-side pressures getting embedded in pricing behaviour'.

Further, the RBI did not find any significant demand-side pressures while, in the same breath, acknowledged that credit growth was high. The 'calibrated tightening' was explained to mean that the future trajectory of rates is a pause or a hike. All policies remain live; a hike of 25 bps in the December meeting is a certainty now. The RBI will continue to remain data-dependent and factor in the breadth of inflation pressures in the months ahead to determine the cumulative dose of hikes. Given that the RBI now sees the Q1 FY28 inflation print at 5.6%, a total of 100 bps may be needed in this cycle. 

(Arya S. Biju)

PURVI MUNDHRA, ECONOMIST AND DEPUTY VICE-PRESIDENT AT CHOICE INSTITUTIONAL EQUITIES

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The 25 bps hike was expected, but the shift to calibrated tightening is the real signal. The RBI has effectively started a hiking cycle it is reluctant to name, and we see a further 25 bps at each of the next two meetings.

The deeper issue is the gap between how worried the RBI sounds and how little it has moved its numbers. It calls inflation the primary concern while still forecasting as though it is transitory. We see FY27 inflation at 5.8-5.9%, against the RBI's 5.2%, a gap that reflects just how much the central bank is still underplaying the price pressures already in the system.

The GDP upgrade, meanwhile, is arithmetic rather than conviction, it simply absorbs a strong Q1 (June quarter), and the back-half numbers look vulnerable. With growth set to slow as inflation climbs, the economy is edging toward a stagflationary mix. The RBI describes the global backdrop as severe but models it as survivable. India's resilience is real, but set against this global setting, it is being asked to do more work than it can comfortably handle, and we think it is operating on borrowed time.

(Arya S. Biju)

RAJANI SINHA, CHIEF ECONOMIST, CAREEDGE RATINGS

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The RBI's MPC (Monetary Policy Committee) decision to hike the policy rate by 25 bps (basis points) was in line with our expectations. The stance was changed to "calibrated tightening", thereby ruling (out) possibility of further rate cuts going ahead. The RBI's upward revision of its FY27 growth projection by 40 bps to 7.1% was also broadly in line with our expectations, although we continue to expect growth to be marginally higher at 7.3% in FY27. At the same time, the governor flagged concerns around second-round effects of higher inflation, rising inflationary expectations, and price pressures becoming more broad-based. Deficient monsoons, supply chain disruptions, and elevated global commodity prices -- including metals, food, and energy -- are expected to keep price pressures elevated. Accordingly, the RBI also raised its inflation projection to 5.2%, slightly above our estimate of 5.0%.
 
Interestingly, the "calibrated tightening" stance was last adopted by the MPC in October 2018 and was subsequently changed to "neutral" in February 2019, alongside a 25 bp rate cut that marked the beginning of a policy-easing cycle. Notably, despite the adoption of a "calibrated tightening" stance in October 2018, no further rate hike was undertaken back then. Given this historical precedent, along with the expected moderation in headline inflation from Q4 FY27 onwards, we continue to believe that the current hiking cycle will be shallow, with scope for another 25-50 bps of rate hikes going forward. Policy tightening should also provide support to the rupee, particularly against the backdrop of rate hikes by major global central banks.

Although the governor did not provide explicit guidance on liquidity absorption, we believe the RBI is likely to maintain its focus on liquidity management. Rate hikes without corresponding liquidity tightening could prove less effective. In the coming days, a portion of the excess liquidity is also likely to be absorbed through higher festive-season currency demand, the maturity of the RBI's short-dollar forward positions, and increased CRR accretion associated with deposit growth. 

(Gunjan Rajput)

DIPTI DESHPANDE, SENIOR DIRECTOR AND PRINCIPAL ECONOMIST, CRISIL LTD.

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The decision by the Monetary Policy Committee of the Reserve Bank of India to change the monetary policy stance to 'calibrated tightening' and raise the policy repo rate by 25 basis points reflects a precautionary response to an increasingly challenging inflation environment. Retail inflation has firmed in recent months, while upside risks from crude oil, commodities and food prices have become more pronounced. A calibrated tightening stance allows the central bank the choice to either hike rates or take a pause depending on evolving inflation conditions.

Since the last policy review, oil prices have risen around 40%, monsoon-related risks have materialised, domestic growth has surprised on the upside, liquidity conditions have eased significantly, and global monetary tightening has gathered pace. The upward revisions to growth and inflation forecasts, the rate action and change in monetary policy stance help align market expectations with evolving macroeconomic realities. Alongside, the central bank is expected to remain committed to maintaining orderly liquidity and financial conditions as the economy enters the festive season.

We see room for another rate hike of 25 basis points in December. Even with higher interest rates, we expect bank credit growth to rise 14.5-15.5% this fiscal, reflecting resilient credit demand and improving economic activity.

(Arya S. Biju)

MADAN SABNAVIS, CHIEF ECONOMIST, BANK OF BARODA

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The MPC (Monetary Policy Committee) decision to hike the repo rate by 25 bps (basis points) has been mainly due to inflationary concerns. As inflation is to rise and average 5.8% in the next three quarters, we can expect another 50 bps hike during this (financial) year with one more hike in December followed by one in February. The RBI has upped the GDP growth forecast, which is in line with ours, as is the projection on inflation at 5.2%. The interesting aspect of the policy is that the RBI has not announced any specific liquidity measures, which is indicative of the fact that the present approach of calibrating liquidity through the VRRR (variable rate reverse repo) route will continue. 

(Meera Nair)

SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR AT ANAND RATHI GROUP

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The RBI's 25-basis-point hike was, in our assessment, a touch-and-go decision shaped by extraordinary circumstances. Resilient domestic growth provided room to act, while rising food prices, elevated global crude prices, higher global and domestic bond yields and rupee depreciation weighed heavily in favour of tightening. This does not necessarily herald a series of further hikes: even the calibrated tightening stance leaves room for a pause, depending on how inflation and external pressures evolve. With the move fully priced in, we do not expect a negative financial-market impact. Indeed, the RBI's willingness to take a difficult decision should reassure markets about its commitment to price stability and strengthen confidence in its management of an unusually challenging environment.

(Devanshu Singla)

RADHIKA PIPLANI, CHIEF ECONOMIST AT MOTILAL OSWAL FINANCIAL SERVICES LTD.

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The RBI raised the repo rate by 25 bps to 5.50%, a move the markets had widely expected. More significantly, it shifted its policy stance from neutral to calibrated tightening. That signals the central bank intends to tighten both banking system liquidity and policy rates to contain inflation. We expect a further 75 bps of tightening in this cycle, taking the repo rate to 6.25%. This includes a 25 bps hike in December, which markets have already largely priced in now.

The RBI was cautious on inflation and raised its full-year forecast to 5.2%, in line with our estimate. Still, it appeared at ease with the growth outlook. It flagged risks from global macro conditions and the effect of higher inflation on rural demand but raised its FY27 GDP growth forecast to 7.1% from 6.7%. We place real GDP growth slightly higher, at 7.2%.

We remain confident in India's growth story despite the RBI's note of caution. The private capex (capital expenditure) cycle appears to be regaining momentum, even with global headwinds and a firmer domestic rate environment. Strong bank credit growth should keep supporting activity across large, medium, and small enterprises. Services, and banks in particular, look set for robust growth.

(Devanshu Singla)

MADHAVI ARORA, CHIEF ECONOMIST, EMKAY GLOBAL FINANCIAL SERVICES LTD.

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RBI hiked policy rates by 25 basis points and adopted a cautious tone, while the change in stance to another new nomenclature, "calibrated tightening" felt more like a forward guidance than a policy stance per se, but has prepared markets for a higher-for-longer interest rate environment. 

With US rates and growth higher and inflation proving stickier, India may need to offer a higher risk premium, particularly amid elevated global volatility, high oil prices and lacklustre natural dollar inflows. Global financial conditions could, thus, increasingly dictate the RBI's reaction function, alongside growth and inflation dynamics. 

From a signalling perspective, while the policy rate and liquidity stance will both incrementally tighten ahead, system liquidity is likely to remain >1% of Net Demand and Time Liabilities by end-March 2027, even with RBI's liquidity absorption in the coming months. We maintain a cumulative rate hike of 75 bps in this cycle, but will be watchful of the fluid global dynamics.

(Divya Moolayattil)

ADITI NAYAR, CHIEF ECONOMIST, ICRA LTD.

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The policy outcome is in line with our expectations of a rate hike with a change in stance to clearly signal that rate cuts are off the table. The inflation prints are expected to harden moving forward, on account of a combination of factors such as the poor monsoon, rising commodity prices and an unfavourable base effect, setting the stage for another rate hike in December 2026. As of now, we do not foresee the need for further rate tightening in 2027.

(Nandini Sinha)

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK

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The MPC delivered a 25-basis-point rate hike in line with expectations, with a surprise shift in stance towards recalibrated tightening. We continue to see 25-50 bps of additional rate hikes going ahead, with further upside if global risks persists.

(Meera Nair)

FUND MANAGERS

PRASHANT PIMPLE, CHIEF INVESTMENT OFFICER, BARODA BNP PARIBAS MUTUAL FUND

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The RBI's six-member Monetary Policy Committee voted unanimously to raise the benchmark repo rate by 25 basis points to 5.50%, the first hike in nearly four years. The MPC also shifted its policy stance to 'Calibrated Tightening' from 'Neutral'. G-sec yields reacted negatively across the curve by approximately 3-5 bps as the stance shifted to calibrated tightening. The shift to calibrated tightening signals further hikes ahead, though the pace will depend on domestic inflation factors and global geopolitical ramifications. In the near term, we expect pressure on bond prices as yields adjust to the tighter path going ahead.

RBI increased the GDP forecast for FY27, considering better FY27 Q1 GDP numbers and raised the CPI forecast for FY27 witnessing ongoing pressure on fuel and expected impact on food due to deficient monsoon. 

(Pratyush Kumar)

SIDDHARTH CHAUDHARY, HEAD OF FIXED INCOME, BAJAJ ASSET MANAGEMENT LTD.

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The RBI's decision is broadly in line with our expectations and, in our view, comes at the right time. India was able to stay accommodative for longer because inflation remained benign and growth needed support. However, the backdrop has changed meaningfully over recent quarters. GDP growth has improved, credit growth remains strong, inflation is becoming increasingly broad-based rather than confined to a few volatile categories, and the transmission from producer prices to consumer prices is gradually becoming more visible. At the same time, real policy rates have compressed and the global environment has become less favourable.

With the US dollar strengthening, global bond yields moving higher, and several central banks either tightening or retaining a restrictive stance, emerging markets require a more meaningful positive real-rate cushion to maintain macroeconomic stability. The RBI's challenge today is not to respond to current inflation, but to prevent future inflation from becoming entrenched. We believe today's move marks the beginning of a calibrated normalization cycle rather than a one-off action. Depending on the trajectory of crude oil prices and global macro conditions, cumulative tightening of 75-100 basis points remains a reasonable possibility. This is about preserving financial stability, anchoring inflation expectations and ensuring that India stays ahead of the curve rather than being forced to catch up later. 

(Devanshu Singla)

PUNEET PAL, HEAD OF FIXED INCOME, PGIM INDIA MUTUAL FUND

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The Monetary Policy Committee delivered a hawkish monetary policy as it changed its policy stance to "calibrated tightening" while increasing the policy repo rate to 5.50%. While the 25 basis-point rate hike was fully priced in by the markets, opinions were divided on any change in the monetary policy stance.

The RBI governor's statement emphasising that average inflation of 5.80% over the next three quarters with "core" inflation projected at 4.40% needs policy recalibration reinforces the hawkishness. We continue to expect incremental 75–100 bps of rate hikes over the next nine months and also expect the RBI to keep withdrawing banking liquidity using various tools at its disposal. 

(Arya S. Biju)

SNEHA PANDEY, FUND MANAGER- FIXED INCOME, QUANTUM AMC

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RBI's 25-basis-point hike was largely expected but the shift to calibrated tightening marked the more important policy signal. With inflation risks still elevated and growth remaining resilient, the policy backdrop now points to a higher-for-longer rate environment, with liquidity normalisation likely to play an increasingly important role alongside further rate action.

(Meera Nair)

RAJEEV RADHAKRISHNAN, CHIEF INVESTMENT OFFICER AND HEAD OF RESEARCH (FIXED INCOME), SBI MUTUAL FUND

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The policy rate recalibration was along anticipated lines, with the change in stance clearly offering guidance on the future trajectory of policy rates. At the same time, the absence of specific measures to normalise liquidity is likely to keep overnight rates below the repo rate. It is expected that the burden of liquidity normalisation may fall on additional open market sales in the near term. 

(Diksha Tripathy)

OTHERS 

ANURAG MITTAL, PRESIDENT AND HEAD, FIXED INCOME

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The 25 bp (basis-point) hike to 5.50% and the shift to a "calibrated tightening" stance make for a balanced policy, considerably milder than a "withdrawal of accommodation". The RBI is normalising rates to keep real rates positive rather than materially tightening financial conditions, and with close to 100 bps of hikes already priced in, most of the adjustment in yields is behind us. Investors should move into 2– to 4-year and moderate duration funds like short term or corporate bond funds where current yields are highly attractive between 7.8-8.0% without meaningful duration risk.

(Divya Moolayattil)

PARVEEN JAIN, PRESIDENT, NATIONAL REAL ESTATE DEVELOPMENT COUNCIL

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The festive season is a very important period for the real estate sector, and stability in interest rates during this period remains positive for homebuyers. However, it is also important to control inflationary pressures and maintain stability in the economy. In this context, the 25 basis points increase in the repo rate should be viewed in the context of the broader economic conditions. Housing demand remains strong at present. We expect the impact of this increase on the residential market to remain limited, supported by strong buyer sentiment, festive demand and the long-term need for homeownership. The real estate sector will continue to demonstrate strength and resilience in maintaining its current momentum.

(Astha Oriel)

ABHISHEK GANDHI, CO-FOUNDER AND CHIEF BUSINESS OFFICER, FATAKPAY

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RBI's decision to raise the repo rate by 25 basis points to 5.50% is a prudent step, given the prevailing geopolitical uncertainties, inflationary pressures and supply-side challenges. The shift in stance to 'calibrated tightening' is also significant, signalling a measured approach where future policy action will remain closely aligned with evolving economic conditions.

Despite the global uncertainty, the Indian economy continues to demonstrate resilience, with the RBI projecting GDP growth at 7.1% this year. In this environment, we believe that a calibrated policy approach will help maintain the right balance between supporting sustainable growth and keeping inflation under control. For businesses and consumers alike, stability and predictability in the policy environment will remain important for sustaining confidence and long-term growth. 

(Pratyush Kumar)

JITENDRA TANWAR, MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER OF NAMDEV FINVEST

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A measured, pre-emptive step by the RBI that reinforces macroeconomic stability. The RBI's 25 bps repo rate hike to 5.50% signals a shift towards a more calibrated tightening environment, with funding costs likely to remain an important consideration for lenders and borrowers. For NBFCs, the focus will be on managing funding costs and maintaining competitive pricing while continuing to ensure access to credit for businesses.

With the festive season approaching, MSMEs will see higher working capital needs for inventory and supplier payments. While some may face pressure on cash flows and margins, we expect the underlying demand for formal credit to remain resilient, particularly across tier-II and tier-III markets. Disciplined underwriting, a diversified funding mix and a strong understanding of small business cash flows will remain critical, so that responsible and timely credit continues to reach MSMEs even as the cost of capital adjusts. 

(Astha Oriel)

V.K. VIJAYAKUMAR, CHIEF INVESTMENT STRATEGIST, GEOJIT INVESTMENTS LTD

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RBI has delivered a timely, hawkish rate hike. The highlight of the policy which was largely on expected lines, is the pivot in monetary stance from neutral to 'calibrated tightening'. This implies, perhaps, two more rate hikes in this tightening cycle. 

The revision in FY27 GDP growth number by 40 bp to 7.1% from 6.7% indicates the central bank's confidence in the growth momentum in the economy. This augurs well for the market. From the sectoral perspective, banking looks the clear winner. Rising floating rates are margin accretive for banks. 

(Gunjan Rajput)

SACHIN BAJAJ, CHIEF INVESTMENT OFFICER, AXIS MAX LIFE INSURANCE

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The Monetary Policy Committee meeting was held against a backdrop of challenging global macroeconomic conditions, persistent geopolitical uncertainties, rising bond yields in advanced economies, and elevated inflationary pressures. As widely expected, the policy committee unanimously decided to raise the policy repo rate by 25 basis points to 5.50% and changed its policy stance from "neutral" to "calibrated tightening". While the rate hike was largely anticipated, the shift in policy stance comes as a modest surprise. 

The central bank highlighted that India's economic growth remains broad-based. However, uncertainties such as a weaker monsoon and potential volatility in oil prices continue to pose upside risks to the inflation trajectory. Overall, the policy signals a clear shift towards containing inflation and anchoring inflation expectations.

Inflation is expected to move towards the upper end of the RBI's tolerance band over the coming months. Additionally, the conflict in West Asia and a weaker monsoon are likely to continue exerting supply-side inflationary pressures. This backdrop increases the likelihood of another rate hike at the MPC's December policy meeting. Given that current bond yields are already factoring in the possibility of three to four rate hikes during the current cycle, we expect the 10-year government security yield to remain elevated in the 7.25-7.50% range for the remainder of the year. 

(Arya S. Biju)

APURVA SHETH, HEAD OF MARKET PERSPECTIVES AND RESEARCH AT SAMCO SECURITIES

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India's central bank announced a rate hike of 25 basis points and moved the interest rates from 5.25% to 5.50%. RBI has joined the rate hike camp of central bankers which is weighing heavy. Thirty-one out of 42 central bankers have hiked interest rates across the world in their most recent policy announcement. India was not the first one and certainly won't be the last. Inflation worries are keeping central bankers awake. Rising debt in the developed nations is forcing central banks to bridge their deficit by increasing rates. After a 40-year downtrend from 1980 to 2020, the global cost of capital is resetting, and India cannot stay insulated with crude (oil) above $100 and the rupee near 96 (to a dollar).

For the economy, this is a shift from growth-first to stability-first. Repo-linked EMIs (equated monthly instalments) rise within a quarter, the rupee gets a floor, and government borrowing costs climb, just as the Centre leans on capex (capital expenditure). For companies, the hike redistributes pain. Leveraged real estate, infrastructure, and debt-heavy mid-caps see margins squeezed, and EMI-driven demand in housing, autos (automobiles) and (consumer) durables slows. CASA-rich (current account savings account-rich) banks gain as loans re-price before deposits; wholesale-funded NBFCs (non-banking financial companies) do not. Net-cash exporters in IT (information technology) and pharma benefit twice over. For markets, expect a valuation reset, not an earnings collapse, with richly valued small- and mid-caps most exposed. 

(Devanshu Singla)

CHURCHIL BHATT, EXECUTIVE VICE-PRESIDENT AT KOTAK MAHINDRA LIFE INSURANCE CO. LTD.

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In line with market expectations, the RBI-led MPC (Monetary Policy Committee) increased the policy repo rate by 25 bps (basis points) and changed its policy stance from neutral to calibrated tightening, reflecting its focus on containing the second-round impact of the otherwise supply-side inflationary pressures. The decision comes against the backdrop of resilient domestic growth, firming inflation expectations, elevated commodity prices, weather disruptions and persistent global uncertainties.

The central bank also revised its macroeconomic projections, raising its FY27 GDP growth forecast by 40 bps to 7.1% and FY27 CPI inflation forecast by 20 bps to 5.2%, reflecting the impact of higher food and energy prices. Core inflation for the year is projected at 4.4%. While no incremental liquidity measures were announced in the policy statement, the market expects the RBI to deploy an appropriate mix of liquidity management tools to align the weighted average call rate (WACR) with the policy repo rate, as and when required. Given the policy action was largely on expected lines, the 10-year benchmark yield is currently trading in the range of 7.23-7.25%, with an upside bias.

(Nandini Sinha)

ASHWANI DHANAWAT, EXECUTIVE DIRECTOR AND CHIEF INVESTMENT OFFICER, SHRIRAM GENERAL INSURANCE

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The RBI's 25-basis-point hike and shift to a 'calibrated tightening' stance is a prudent, pre-emptive move. With crude above $100, a softer rupee and inflation broadening beyond food, waiting for the full pass-through to show up in CPI would have risked entrenching inflation expectations. The RBI also retained a robust 7.1% growth outlook, which signals confidence that it can tighten without hurting the economy's momentum.

We see this as a shallow cycle rather than a prolonged one. Further action will depend on crude, the currency and the next two inflation prints. For long-term investors like insurers, higher yields offer an attractive opportunity to lock in returns on fresh accruals. We expect bond markets to remain volatile in the near term and will deploy gradually on yield spikes. 

(Gunjan Rajput)

AMIT PRAKASH SINGH, CO-FOUNDER AND CHIEF BUSINESS OFFICER, URBAN MONEY

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The 25-basis-point hike has to be viewed in the larger geopolitical context. With the conflict in West Asia feeding into energy prices and global inflationary pressures, the RBI's priority is clearly to preserve macroeconomic stability. For real estate, this is a measured intervention rather than a disruption. Housing demand remains fundamentally strong, and a stable macro environment will ultimately be more important for the sector than a modest, near-term movement in borrowing costs. 

(Meera Nair)

ANUJ PURI, CHAIRMAN, ANAROCK GROUP

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The RBI's 25-basis-point increase in the repo rate was expected because of the prevailing inflationary pressures and geopolitical uncertainty brought on by the Gulf conflict. The rate hike will put pressure on consumer sentiment and discretionary spending – this has a direct correlation to housing demand. The festive season is a key period for housing demand, and an increase in borrowing costs will affect buyer sentiment.

It is worth noting that residential prices in the top seven cities have already risen significantly, stretching affordability. As per Anarock Research data, average residential prices increased 7% year-on-year. With the rate hike, dearer home loans will make buyers more selective and cause decision timelines to extend, particularly in the price-sensitive segments. A modest increase in monthly instalments will result in deferred purchase decisions or budget recalculations among affordable housing buyers.

The rate hike is unlikely to have a direct impact on commercial real estate, which continues to be driven by structural demand from Global Capability Centres, technology spaces, banking and financial services sectors, and other occupier segments. However, retail real estate may see some near-term impact. Higher financing costs coupled with the possibility of softer festive consumption could make developers and investors more cautious. Some new mall projects could potentially be deferred until there is greater clarity on demand. 

(Narayana Krishna)

End

Compiled by Madhuri Pawar

Filed by Rajeev Pai

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