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In its report analysing the October Monetary Policy Committee (MPC) minutes, SBI Research said the Governor's communication showed a greater focus on future risks and the possibility of further tightening.

“We continue to maintain 50 bps rate hike in December either through a plain vanila 50 bps repo rate hike or an exotic 50 bps rate hike with a 25 bps repo rate and a 25 bps asymmetric widening of LAF corridor,” the report said.

RBI Governor Sanjay Malhotra had indicated in the October MPC minutes that future policy decisions would involve either a rate hike or a pause, depending on how inflation and economic growth evolve.

The MPC had unanimously raised the repo rate by 25 basis points to 5.50 per cent earlier this month and changed its stance to calibrated tightening.

Malhotra said the duration and extent of the rate-hiking cycle would depend on underlying inflation, the spread of price pressures, the effects of supply shocks and demand conditions.

Against this backdrop, the report outlined two possible options for the December policy. The RBI could raise the repo rate by 50 basis points to 6 per cent, or increase it by 25 basis points to 5.75 per cent while widening the liquidity adjustment facility (LAF) corridor asymmetrically.

Under the second option, the marginal standing facility (MSF) rate would rise to 6.25 per cent, while the standing deposit facility (SDF) rate would remain at 5.50 per cent.

SBI Research said this approach could help maintain orderly market functioning amid global uncertainty.Inflation remains a key concern.

SBI Research said the number of commodities accounting for 75 per cent of the Consumer Price Index's weighted contribution rose from 25 in August to 31 in September, indicating that price pressures had spread across a wider range of items.

The report expects inflation to peak below 6.5 per cent in November. It also projects dated Brent crude prices to average USD 110 per barrel over a 15-day forecast period, adding to the risks facing the inflation outlook.

The RBI's October MPC minutes projected headline retail inflation at 6 per cent in the third quarter of FY2026-27 before moderating to 5.7 per cent in the fourth quarter.

The central bank has also projected GDP growth at 7.1 per cent for FY2026-27.The RBI's next MPC meeting is scheduled for December 2-4, when policymakers will reassess inflation and growth conditions.

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