Rising Interest Rates to Challenge Global Economic Growth in H2 FY27

The second half of the current financial year is expected to be challenging for global economic growth due to rising interest rates, according to V Anantha Nageswaran, Chief Economic Advisor. This prognosis is based on central banks' decisions to raise interest rates worldwide to combat inflation. Inflation, driven by high-energy prices, will weigh down on economic growth rates.

The US Federal Reserve was the first major central bank to revise its key policy rate upwards by 25 basis points on September 16. SBI Research has recommended that RBI should raise the benchmark Repo Rate by 25 basis points each in its Monetary Policy Committee meeting in October and December.

RBI will decide whether to increase interest rates, considering that retail inflation is within the target range. India's GDP growth rate is expected to be 6.7% for FY27, with Q3 and Q4 growth rates projected at 6.5% and 6.8%, respectively.