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RBI Rate Hikes Likely in October and December, Analysts Forecast
Economists at Bank of America anticipate two 25 basis-point rate hikes from the Reserve Bank of India by year-end, driven by persistent inflation and robust economic growth. The central bank's focus on maintaining price stability could lead to a…
Analysts at Bank of America predict the Reserve Bank of India (RBI) will increase the repo rate by 25 basis points in both its October and December policy meetings. This forecast reflects the central bank's ongoing commitment to managing inflation, which analysts expect to remain elevated.
Core inflation, excluding volatile food and energy prices, is anticipated to stay above the RBI's comfort zone, despite easing headline inflation. Strong domestic economic activity and rising crude oil prices further support the expectation of tighter monetary policy. The RBI’s inflation targeting framework prioritizes price stability, suggesting it will act to cool demand if inflationary pressures persist.
A cumulative 50 basis-point increase by year-end would push the repo rate higher, influencing short-term market rates and the cost of borrowing for businesses and consumers. This hawkish stance aims to anchor inflation expectations and reinforce the RBI's credibility in achieving its mandated inflation target.
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