RBI May Hike Interest Rates as Early as October Amidst Hawkish Shift
The Reserve Bank of India (RBI) may be forced to raise interest rates as early as October due to a hawkish shift in monetary policy by the US Federal Reserve and narrowing interest rate differential between the two countries, according to a research report by Yes Bank.
The US Federal Reserve raised its policy rate by 25 basis points to a target range of 3.75-4 percent in a unanimous decision, revising its 2026 inflation and growth projections higher while lowering its unemployment forecast.
Yes Bank expects another 25-basis-point rate hike by the Fed in December 2026, citing the central bank's dot plot and assessment that inflation remains elevated. The report notes that the hawkish shift has changed market expectations, with investors now pricing in another US rate hike this year.