Brokerages Forecast Reserve Bank of India Rate Hikes Through 2028
Global and domestic brokerages expect the Reserve Bank of India to raise interest rates by up to 75 basis points to combat rising food and energy inflation.
Global brokerages and domestic analysts forecast that the Reserve Bank of India will maintain a monetary tightening path through the first half of fiscal year 2028. Bank of America, Goldman Sachs, and UBS expect the central bank to hike the repo rate by approximately 75 basis points during meetings scheduled for FY27. JM Financial predicts a slightly shallower tightening cycle of 50 to 75 basis points.
These projections follow a surge in India's headline Consumer Price Index inflation, which hit a 23-month high of 5.54 percent in September. Food inflation, which reached 7.7 percent, has been the primary driver for five consecutive months. Analysts cite Middle East tensions, energy supply disruptions, and the intensifying El Nino effect as key upside risks to prices. UBS predicts headline inflation will average near 5.2 percent in FY27 and could exceed 5 percent through the first half of FY28.
JM Financial expects inflation to rise to 6 percent in the October-December quarter due to depleted reservoir levels, deficient rainfall, and weaker kharif sowing. The firm advised the Government of India to implement supply-side interventions to prevent food price pressures from spreading and to evaluate fiscal measures to attract foreign institutional investor flows if crude oil prices remain elevated.
