After months of waiting and watching, the Reserve Bank of India (RBI)’s Monetary Policy Committee (MPC) has decided to act to try to rein in rising inflation. Its decision to raise interest rates by 25 bps seemed increasingly inevitable. The RBI now projects retail inflation at 4.9% in Q2, higher than its August projection of 4.7%. This is set to rise in Q3 to 6% before easing marginally to 5.7% in Q4. Global oil prices have again crossed $100 a barrel following a brief reprieve. India’s oil marketing companies, likely following government instructions, have held off on passing most of this increase on to consumers. However, they cannot withstand such fiscal pressures forever. The impact of higher crude prices has been bad enough, but higher petrol and diesel prices will likely send inflation spiralling. Simultaneously, a deficient monsoon is pushing up food prices and will continue to do so for the rest of the year. When supply-side factors…
Adequate response: on the RBI and inflation
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Originally published by The Hindu on Oct 9, 2026
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