SBI Chairman CS Setty Expects 50 bps RBI Rate Hike in December

State Bank of India chairman CS Setty said on Monday, 26 October, that the Reserve Bank of India could raise the repo rate by another 50 basis points at its December meeting and then hold it until 31 March. He was speaking at the Business Standard BFSI Insight Summit in Mumbai, the newspaper reported. A 50-basis-point increase would take the repo rate from 5.5% to 6%, the level SBI’s own economists have been forecasting since the October policy.

Loan EMIs Could Rise Again

More than half of bank loans are now linked to external benchmarks such as the repo rate, so a December hike would pass to many home, car and personal loan borrowers within weeks. Setty said higher rates would “definitely influence the composition as well as the quantum of credit demand”, with borrowing for discretionary spending likely to slow. “I don’t think demand for credit for productive activities will weaken,” he said. Earlier this month he said banks were unlikely to raise deposit rates for two to three months because the system had enough liquidity, which means savers may not see matching gains soon.

First Hike in About Four Years Came on 7 October

The RBI’s Monetary Policy Committee raised the repo rate by 25 basis points to 5.5% on 7 October, its first increase in about four years, and changed its stance from neutral to “calibrated tightening”. The vote on the rate was unanimous, but two members, Nagesh Kumar and Ram Singh, wanted to keep the stance neutral. The RBI raised its 2026-27 inflation forecast to 5.2% and projected about 6% for the October-December quarter. SBI Research expects consumer inflation near 6.8% in November. IPB reported on the MPC minutes that took rate cuts off the table.

Also read RBI Data Centre Opens in Jatni; Modi Warns of Cyber Attacks on Banks

Next MPC Meeting on 2-4 December

The committee meets next from 2 to 4 December, with the decision due on the last day. Setty’s call is a forecast, not an RBI signal; the central bank has not indicated the size of any further move. The October consumer inflation figure, due in mid-November, will be among the main data the committee weighs. More on the cost of borrowing is in Economy.

Source: RBI Monetary Policy Statement, 7 October 2026. Also based on reporting by Business Standard and Business Today.

Image: Business Standard.