With reference to the Monetary Policy Committee (MPC) and RBI's upcoming actions, consider the following statements: 1. The RBI is expected to hike interest rates by 125 basis points in the upcoming October meeting. 2. Nomura predicts a cumulative 50 bps hike by December. 3. The MPC is the body within the RBI responsible for determining benchmark interest rates. Which of the statements given above is/are correct?

The Reserve Bank of India (RBI) is set to hold its Monetary Policy Committee

GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims· 30 September 2026

Monetary policy and inflation targeting: a core GS3 topic regarding RBI's role in price stability.

Why in news

The Reserve Bank of India (RBI) is scheduled to hold its Monetary Policy Committee meeting from October 5 to October 7 to decide on interest rate adjustments following a US Federal Reserve rate hike.

Background

The RBI is expected to hike interest rates by 25 basis points to curb inflation. While markets anticipated a 125 basis point increase over a year, Nomura predicts a cumulative 50 bps hike by December.

Facts for Prelims

BodyMonetary Policy Committee (MPC): The body within the RBI responsible for determining the benchmark interest rates.
FactNifty Bank lost nearly 1,800 points due to margin pressures on bank stocks.
FactNomura prediction: Cumulative 50 bps hike by December.
FactRBI expected hike: 25 basis points in the upcoming October meeting.

Prelims practice question

With reference to the Monetary Policy Committee (MPC) and RBI's upcoming actions, consider the following statements:

The RBI is expected to hike interest rates by 125 basis points in the upcoming October meeting.
Nomura predicts a cumulative 50 bps hike by December.
The MPC is the body within the RBI responsible for determining benchmark interest rates.

Which of the statements given above is/are correct?

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

Show answer

Answer: (d) 2 and 3 only — Statements 2 and 3 are correct. Statement 1 is incorrect: The RBI is expected to hike interest rates by 25 basis points.

For Mains

Q. Discuss the challenges faced by the RBI in balancing inflation control with maintaining banking sector profitability in a high-interest-rate environment.

Dimensions to cover in your answer

Monetary transmission: Lag between RBI rate hikes and actual lending rate adjustments by private banks
Margin compression: Impact of rising deposit costs on Net Interest Margins (NIMs) for commercial lenders
Global synchronization: Influence of US Federal Reserve policy on domestic capital flows and currency stability

Keywords: Monetary Policy · Inflation Targeting · Net Interest Margin · Basis Points · Liquidity Management

Read the full news →Source: Economic Times ↗

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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.