With reference to the Overnight Index Swap (OIS) rate in India, consider the following statements: 1. The market suggests a projected rate hike of 50-bps over the next year. 2. The market probability of a Fed hike is currently over 90%. 3. The one-year OIS rate reached 6.11% as of September 2026. Which of the statements given above is/are correct?

India OIS rate hits 6.11%, suggesting at least three rate hikes over next year

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 16 September 2026

Monetary policy and inflation management: a key GS3 topic regarding interest rate signals.

Why in news

The one-year overnight index swap (OIS) rate in India rose to 6.11%, signaling potential interest rate hikes by the RBI to combat inflation and rising oil prices.

Background

The one-year OIS rate reached 6.11% on Tuesday, the highest since early June. Market analysis suggests a likely rate hike in October, with a 90% probability of a Fed hike on Wednesday.

Facts for Prelims

FactOne-year overnight index swap (OIS) rate in India: 6.11% as of September 2026
FactMarket probability of a Fed hike: over 90%
FactProjected rate hikes: At least three 25-bps hikes over the next year

Prelims practice question

With reference to the Overnight Index Swap (OIS) rate in India, consider the following statements:

The market suggests a projected rate hike of 50-bps over the next year.
The market probability of a Fed hike is currently over 90%.
The one-year OIS rate reached 6.11% as of September 2026.

Which of the statements given above is/are correct?

(a)2 only
(b)3 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (c) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The note projects at least three 25-bps hikes.

For Mains

Q. Discuss the role of Overnight Index Swaps (OIS) as a tool for gauging monetary policy expectations and their significance in managing inflation and exchange rate volatility.

Dimensions to cover in your answer

Monetary transmission: Impact of OIS-driven expectations on commercial lending rates and liquidity
External pressure: Correlation between Fed interest rate decisions and domestic inflation-targeting measures
Inflationary drivers: Impact of global oil price volatility on the RBI's repo rate trajectory

Keywords: Monetary Policy · Overnight Index Swap · Inflation Targeting · Repo Rate · Liquidity Management

Read the full news →Report a mistake in this note Source: Economic Times ↗Also: GS2 · Government policies & schemes

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