Economists Predict Reserve Bank of India Rate Hikes in 2026

Economists and financial analysts expect the Reserve Bank of India to raise the repo rate in October 2026 to address accelerating inflation and excessive liquidity. A poll by The Times of India indicates a majority of experts anticipate a 25 basis point increase, which would mark the first hike since February 2023. While some analysts from Bank of Baroda and India Ratings suggest the committee might maintain the status quo in October to further monitor the inflation cycle, others predict cumulative hikes of 50 to 75 basis points this financial year.

Nomura Holdings recently forecasted that the central bank will implement two rate hikes in 2026, specifically during the October and December meetings. This projection is driven by expectations that retail inflation will exceed 6%, even as GDP is forecasted to expand by 7% for FY27. These domestic pressures are compounded by global trends, including a recent 25 basis point increase by the Federal Reserve System to 3.75–4% and an expected further hike in December.

Analysts warn that higher rates will increase borrowing costs for households and corporate loans. Additionally, Nomura notes that while India's high-end manufacturing outlook is positive, the country risks lagging if AI investment remains concentrated in Northeast Asia and the United States.