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[BUSINESS] · India, Pakistan · 4 sources

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Part of situation: South Asian monetary policy and inflation trends (2 clusters)

Monetary policy tightening anticipated in India and Pakistan

monetary policy interest rate hike inflation Reserve Bank of India State Bank of Pakistan

Central banks in India and Pakistan are facing increasing pressure to raise interest rates due to rising inflationary risks and external economic factors.

In India, SBI Research has maintained a forecast for a 50-basis-point repo rate hike in December. This prediction follows the Reserve Bank of India's (RBI) recent decision to raise the repo rate to 5.50 per cent and shift toward a calibrated tightening stance. Analysts suggest the RBI may implement the hike through a standard 50-basis-point increase or an asymmetric widening of the liquidity adjustment facility (LAF) corridor. Additionally, a report from YES Bank noted that maintaining an interest rate gap between India and G7 economies is crucial for attracting foreign debt capital, especially as the US Federal Reserve continues its rate-hiking cycle.

In Pakistan, research from AL Habib suggests a 54 per cent probability that the State Bank of Pakistan (SBP) will raise the policy rate by 50 basis points to 12.0 per cent during its October 26 announcement. The potential hike is driven by rising core inflation and geopolitical tensions that have pushed crude oil prices toward USD 100 per barrel. Such price increases pose risks to Pakistan’s trade balance, exchange-rate stability, and domestic energy costs.

Entities

India · Reserve Bank of India · SBI Research · State Bank of Pakistan · Yes Bank

Claims

What the coverage asserts, and how many sources carry each claim.

  • [○ 1 SOURCE] The RBI recently raised the repo rate by 25 basis points to 5.50 per cent. www.devdiscourse.com
  • [○ 1 SOURCE] AL Habib Research assigns a 54% probability to a 50bps hike by the SBP to 12.0%. tradechronicle.com
  • [○ 1 SOURCE] Pakistan's headline inflation moderated to 10.3% YoY in September 2026. tradechronicle.com
  • [○ 1 SOURCE] The RBI's inflation projection for the third quarter of FY27 is 6 per cent. www.latestly.com
  • [○ 1 SOURCE] YES Bank reported that India's interest rate gap with G7 economies is a key consideration for monetary policy. www.latestly.com
  • [○ 1 SOURCE] SBI Research forecasts a 50-basis-point repo rate hike in December for India. www.devdiscourse.com

Sources

SBP Monetary Policy Preview: 50bps hike likely – AL Habib Research [tradechronicle.com]
SBI Research retains call for 50-bps December rate hike amid broadening inflationary pressures | Business [www.devdiscourse.com]
Business News | India's Interest Rate Gap with G7 in Focus as RBI Weighs Inflation Risks: Report [www.latestly.com]
SBI Questions RBI Liquidity Move Amidst Stance on Monetary Tightening [newsable.asianetnews.com]