RBI likely to raise repo rate to 5.75% with hikes in October and December

The Reserve Bank of India is projected to raise its repo rate by 25 basis points in both October and December, pushing it towards 5.75%. Inflationary pressures, driven mainly by elevated food and energy prices, are expected to drive these rate increases in the near term.

Nomura forecasts that consumer inflation will initially rise before gradually declining over the coming quarters. Economists suggest this rate cycle could be relatively short-lived, as potential consumption slowdowns may limit the duration of tightening measures.