Bank of America Securities has revised its outlook for the Reserve Bank of India, now projecting a total of 100 basis points of repo rate hikes through the first half of 2027. The brokerage now expects the first 25‑basis‑point increase at the RBI’s October 7 meeting, followed by a 75‑basis‑point acceleration later in 2026.
BofA cites a resilient domestic economy and expanding inflationary pressure as key drivers. Oil prices have hovered between USD 100 and 110 per barrel throughout September, while non‑food credit growth hit 17.8% year‑on‑year in September. The brokerage also flagged a broadening food‑price inflation and rising wholesale inflation, which is now touching 5.9% in August 2026.
In a scenario where real GDP remains near 7% and headline inflation stays close to 5.5%, the RBI could move beyond the 100‑basis‑point total, pushing front‑end rates past 6.5%. Conversely, a sharp slowdown in growth below 7% could see the central bank deliver fewer or no hikes.
The RBI is expected to announce its first rate increase on October 7, 2025, and is slated to shift its stance to calibrated tightening in December, according to BofA. Markets will now be watching the central bank’s policy committee closely for any sign that the tightening cycle will extend into 2027.