The Reserve Bank of India (RBI) could increase its benchmark repo rate to 6.25 per cent by the first half of 2027 as inflationary pressures remain elevated and economic growth continues to show resilience, according to a report by Deutsche Bank. The projected move would mark a cumulative increase of 100 basis points in interest rates during the current tightening cycle. The bank expects the RBI to begin raising rates with a 25-basis-point hike in December 2026, followed by a further 50 basis points of increases during the first half of 2027.
\n\nThe outlook is more hawkish than prevailing market expectations, with the report pointing to economic growth above 7 per cent and inflation risks that could keep monetary policy restrictive.
\n\nDeutsche Bank's projections indicate that the RBI could face increasing pressure to prioritise price stability over the coming quarters. Persistent inflation, coupled with stronger-than-expected economic activity, could prompt the central bank to tighten monetary conditions further.
\n\nThe report estimates that consumer price index (CPI) inflation will average 6 per cent in October-December 2026, before easing to 5 per cent in FY27 and 4.7 per cent in FY28.
\n\nHowever, the inflation outlook remains vulnerable to further price increases. A potential…
Original source: https://www.timesnownews.com/business-economy
