The Reserve Bank of India (RBI) is likely to raise rates by 25 basis points in both October and December policy review meetings, reaching a terminal rate of 5.75 per cent, according to Japanese brokerage Nomura.
The terminal rate represents the maximum or minimum target rate expected within a tightening or easing cycle, respectively.
The likelihood of interest rate hikes is expected to decline starting in February 2027, driven by anticipated weaker consumer spending and a softer inflation outlook for the coming year.
“The RBI hikes by 25 basis points in each of October and December to a terminal rate of 5.75 per cent, though there is some risk of a one-and-done hike.
“We see the probability of rate hikes diminishing from February 2027 onwards, because of a potential consumption slowdown and a lower year-ahead inflation outlook,” global financial services group Nomura said in a report on Tuesday.
On inflation, Nomura expects cyclical pressures from food and energy prices to push up
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