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 signalled 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 sa

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 signalled 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.