RBI May Hike Repo Rate by 75-100 bps in Current Cycle: SBI Report
SBI Capital Markets has projected that the Reserve Bank of India will raise the repo rate by 75-100 basis points during the ongoing tightening cycle. The report suggests a larger rate increase could occur in December 2026, contingent on inflation data at that time.
The analysis forecasts that consumer inflation will peak in the third quarter of FY27 before moderating thereafter. However, the report cautions that external headwinds including elevated crude oil prices, geopolitical tensions, and elevated borrowing costs may constrain consumer spending.
On the positive side, higher interest rates are expected to bolster bank margins in FY27. The report also anticipates that bonds could attract renewed investor interest in FY28 as the rate cycle evolves.
