The Reserve Bank of India (RBI) is likely to raise rates when it meets for its bi-monthly policy review from October 5 to 7, following in the footsteps of the US Federal Reserve, which raised rates earlier this month.

Treasury heads and fixed-income experts showed that a majority expect the RBI’s monetary policy committee (MPC) to hike the repo rate by 25 basis points to 5.5 percent, marking the first increase since February 2023.

While the foreign currency non-resident bank (FCNR-B) deposit scheme was a massive success, garnering nearly $133 billion, the rupee is yet to see a meaningful appreciation.

Earlier this week, the currency briefly touched the 96 per dollar mark but has since recovered following RBI’s likely intervention.

Bond yields have also surged globally, with the benchmark 10-year US treasury yield rising to 5.2 percent, its highest since 2007. The 30-year US yield touched its highest since 2004.

Indian 10-year benchmark yield also climbed to 7.1 percent, narrowing the interest rate differential between the two countries.