Jefferies Predicts Reserve Bank of India December Rate Hike
Jefferies predicts the Reserve Bank of India will raise the repo rate by 25-50 basis points in December following a moderation in system liquidity surplus.
Jefferies Group predicts the Reserve Bank of India will raise the repo rate by 25 to 50 basis points during its Monetary Policy Committee meeting on December 4, 2026. This expected hike follows a moderation in system liquidity surplus, which exceeded 2 trillion rupees in October 2026 as the central bank utilized tighter cash reserve ratio requirements and variable rate reverse repo operations.
Bank credit growth reached 18 percent in October 2026, fueled by agricultural and corporate lending. However, the brokerage expects this pace to moderate to 13 percent by March 2028. Jefferies suggests that falling bond yields and crude oil prices will lower working-capital demand, prompting companies to pursue alternative funding options like external commercial borrowings.
Improved deposit growth of 17 percent, supported by Foreign Currency Non-Resident Bank inflows, is expected to enhance bank return on assets and net interest margins.
