The forecast from SBI’s Economic Research Department differs from the recent expectation among most experts that rates would stay unchanged for an extended period. The repo rate is the interest rate banks pay when borrowing from the RBI. The proposed increases remain a forecast, not an announced RBI decision.

The research team sees three key risks. Crude could climb to $123 a barrel amid international tensions, consumer inflation is spreading to areas such as medicines and electronics, and global bond yields, particularly in the US, are touching decade-high levels.

SBI’s Group Chief Economic Adviser, Soumya Kanti Ghosh, views a combined 50-basis-point increase as a precaution that would signal the RBI’s willingness to respond. The concern is that more expensive imported oil could push up prices even if near-term inflation readings look manageable. Businesses facing higher production costs may also pass them on to buyers.

The report sees India’s 10-year government bond yield moving towards 7.15% or above, while banking liquidity could tighten during the festive months. SBI’s researchers think the RBI may favour rate increases over alternatives such as raising the cash reserve ratio. The October monetary policy meeting will determine the RBI’s next move.