India’s policy rate could reach 6.25% in the first half of 2027 under a Deutsche Bank forecast reported by ANI, extending tightening beyond the Reserve Bank of India’s December meeting.
The forecast calls for a 25-basis-point increase in December and another 50 basis points in the first half of 2027. That would put the repo rate 75 basis points above its current 5.50% and 100 basis points above the 5.25% level before the RBI’s October increase, ANI reported.
September consumer price index (CPI) inflation was provisionally 5.54% year over year, up from a final 4.83% in August, the Ministry of Statistics and Programme Implementation said. Food inflation rose to 7.74% from 5.97%.
The RBI unanimously raised its repo rate by 25 basis points to 5.50% on Oct. 7 and shifted its policy stance to calibrated tightening. Its projections put fiscal 2026-27 inflation at 5.2%, including 6% for October-December, and real gross domestic product growth at 7.1% for the fiscal year.
ANI also reported that Deutsche Bank expects inflation to average 6% in October-December 2026, 5% in fiscal 2026-27 and 4.7% in fiscal 2027-28. The bank projects real GDP growth above 7% in both fiscal years. Its reported risks to growth in the second half of fiscal 2026-27 include higher oil prices, a below-normal monsoon and the base effect from the previous year’s goods and services tax cuts.
The RBI cited a deficient southwest monsoon, El Niño conditions and volatility in international oil prices as inflation risks. ICRA’s Oct. 7 outlook also projected a December rate increase, but said it expected no further tightening unless there were “sizeable negative surprises on the inflation front.” ICRA noted that October’s hike followed a gap of more than three years without a rate increase.
The RBI’s Monetary Policy Committee said its next move could be “a rate hike or a pause,” depending on conditions. EconoTimes previously covered how inflation’s spread could shape the next rate move. The RBI’s next policy meeting is scheduled for Dec. 2-4.
