As inflation continues to rise and the rupee is approaching a record low, policymakers have to turn around. The Bank of India is expected to raise interest rates for the first time in nearly four years on Wednesday. Once interest rates are raised, the Reserve Bank of India will be in the same camp as its Asian counterpart, which has begun to tighten policy. This will also be the first rate hike under Governor Sanjay Malhotra — he took office in December 2024 and led a series of interest rate cuts last year. Of the 41 economists surveyed by the media, 35 expected the six-member monetary policy committee to raise the benchmark interest rate by 25 basis points to 5.50%, while the rest expected to stand still. The Commission is expected to maintain a neutral policy position, leaving room for options for follow-up actions.

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