Natixis Sees RBI Hiking Rates by 50 Bps Later This Year Amid Inflation Concerns

Natixis, an investment bank, is forecasting that the Reserve Bank of India (RBI) will keep interest rates unchanged in August before raising them by 50 basis points later this year. The reason for this expectation is the persistent Rupee weakness and rising inflation that are threatening India's financial outlook.

The US Dollar to Indian Rupee (USD/INR) exchange rate has ended July near 95.40, which is around 6% weaker since the start of 2026. Natixis believes that higher interest rates will be needed to restore confidence in the Rupee and prevent inflation expectations from becoming unanchored.

The bank expects consumer inflation to have risen to 4.4% in June, with risks tilted higher due to a weak monsoon, rising food costs, and renewed gains in Brent crude. Wholesale inflation has climbed more sharply, reaching 9.9% year on year, squeezing company margins.