Rising inflation pressures, with August CPI at 4.82% and forecasts for Q3 peaking near or above 6%, represent the dominant driver behind the 77.5% market-implied probability of a 25 basis point repo rate hike at the October 5-7 MPC meeting. Elevated Brent crude above $107 per barrel, broadening food price gains, and liquidity absorption operations have shifted economist consensus toward preemptive tightening from the current 5.25% level. This aligns with the RBI’s 4% target and neutral stance while addressing risks of second-round effects amid strong growth. A hold retains only 10% odds, with larger moves priced far lower, reflecting data dependence ahead of the decision and potential follow-through in December.