RBI may face higher pressure to hike rates in October as hawkish Fed narrows rate gap: Report

A report by Yes Bank says the Reserve Bank of India (RBI) could face mounting pressure to start raising interest rates as early as October, after the US Federal Reserve adopted a more hawkish stance and the India–US interest-rate differential narrowed further. While any RBI decision would still depend on domestic growth and inflation dynamics, the report points to firmer global crude prices, higher headline CPI in August, and a rise in core inflation as potential triggers. It also notes that the effectiveness of a rate hike may hinge on how well the RBI can absorb surplus liquidity, with the weighted average call rate (WACR) at 5.05%. The Fed raised its policy rate by 25 basis points to 3.75%-4.0% in a unanimous 12-0 decision, and revised up 2026 inflation and growth projections.