Economists say the Reserve Bank of India is increasingly likely to tighten
policy in coming months to mirror regional peers that have tightened amid Middle
East-driven inflation pressures. Governor signaled last Friday that
policymakers could raise rates if inflationary pressures become more broad-based
and persistent. Last week the RBI left the policy rate at 5.25% but raised its
inflation forecast for the year ending March 2027 from 4.6% to 5.1%. HSBC India
chief economist Pranjul Bhandari said the comments open the door to a rate hike
in August — the first since February 2023 — and has moved his call forward to
hikes in August and October versus prior expectations in late-2026 and Q1 2027.
Deutsche Bank and Goldman Sachs still model a 50 bp move in late-2026 taking the
policy rate to 5.75%. Analysts say a rate hike is largely a matter of timing.
