SBI Research retains call for 50-bps December rate hike amid broadening inflationary pressures

SBI Research kept its forecast for a 50-basis-point repo rate hike in December, arguing that inflationary pressures remain entrenched, crude oil prices are elevated, and the Reserve Bank of India is leaning toward tighter policy. The firm reviewed the October Monetary Policy Committee (MPC) minutes and said the governor’s messaging emphasized future risks and the possibility of additional tightening, even though the RBI ruled out rate cuts near term. After the MPC unanimously raised the repo rate by 25 basis points to 5.50% and shifted to “calibrated tightening,” SBI laid out two December scenarios: a direct hike to 6%, or a smaller hike to 5.75% combined with an asymmetric widening of the LAF corridor. SBI also cited a broadening in CPI contribution from commodities and projected inflation to peak below 6.5% in November.