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US Fed Hikes Rates to 3.75–4%; RBI MPC Seen Raising Repo Rate to 5.5% in October

EconomyCORE
Target:UPSC GS-IIIMPSCBankingSSC GATeachingPrelims HighMains MediumStatic GK Link
16 Sept 2026
~2 min
Source: Indian Express
Key Data:Fed funds rate target range: 3.75–4%25 bps rate hikeIndia CPI (August): 4.82%Expected RBI repo rate: 5.5%RBI MPC meeting: October 5–7US 10-year bond yield: above 5%
Bodies:US Federal ReserveFOMCRBIMonetary Policy Committee (MPC)Bank of EnglandBank of JapanEuropean Central BankState Bank of India
Practice MCQs from today's news ▸
What This Article Covers

1.Fed's FOMC raised the federal funds rate by 25 bps to 3.75–4%, the first US rate hike in three years.

2.RBI MPC is expected to announce a 25 bps repo rate hike to 5.5% at its October 5–7 meeting.

3.India's August CPI at 4.82% remained above the RBI's 4% target, making monetary tightening a key exam topic.

The Big Picture
Prelims · HighMains · Medium

The US Federal Reserve has raised the federal funds rate target range by 25 bps to 3.75–4%, its first hike in three years, with all 12 FOMC members voting in favour. With India's CPI inflation at 4.82% in August and price pressures generalising, the RBI's MPC (Oct 5–7) is expected to hike the repo rate by 25 bps to 5.5%. This is a high-yield monetary policy development for Prelims and Mains.

Exam Lens

Quick Exam Facts From News

Fed Rate Hike25 bps to 3.75–4%
FOMC Vote12 members, unanimous
First Fed Hike In3 years
RBI MPC MeetingOctober 5–7
Expected RBI Repo Rate5.5% (first hike in 3.5 years)
India CPI (August)4.82%
RBI Inflation Target4% CPI with 2–6% tolerance band
US 10-Year Bond YieldCrossed 5%

1-Minute Revision

  • ›Fed Rate Hike: 25 bps to 3.75–4%
  • ›FOMC Vote: 12 members, unanimous
  • ›Target this Data: Fed funds target 3.75–4%; hike of 25 bps; expected RBI repo rate 5.5%
  • ›Target this Nodal Body: US Federal Reserve/FOMC; RBI's Monetary Policy Committee
  • ›Target this Legal Point: RBI's CPI inflation target is 4% with a 2–6% tolerance band

Mastered this topic? Test your knowledge with a full MCQ quiz.

Practice exam-style questions, track your score, and strengthen your recall.

Q1Static LinkageEasy

Which body mentioned in the article sets the policy repo rate in India?

Q2Statement-basedHard

Consider the following statements regarding the global rate action:

1. The US Federal Reserve's FOMC unanimously voted to raise the federal funds rate target range by 25 bps to 3.75–4%.

2. The RBI MPC is expected to keep the repo rate unchanged at 5.25% at its October meeting.

3. The Bank of Japan is widely seen raising interest rates to 1.25%, the highest in 31 years.

Which of the statements given above is/are correct?

Q3Data-centricMedium

According to the article, what was India's Consumer Price Index (CPI) inflation rate in August?

Q4Application/ImpactMedium

Why does the article say pressure on the RBI to hike interest rates is increasing?

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