Emkay Global Financial Services expects the Reserve Bank of India (RBI) to raise interest rates by another 50 basis points by February 2027, citing rising inflationary pressures and tighter global financial conditions, news agency ANI reported on Thursday.
Source: ANI via The Hindu BusinessLine
In its analysis of the minutes of the RBI's October Monetary Policy Committee (MPC) meeting, Emkay forecast a 25-basis-point hike each in December 2026 and February 2027 — yaani, a quarter of a percentage point each time, and half a percentage point in total. That would take the total increase in the current tightening cycle to 75 basis points.
Inflation is spreading, says Emkay
Emkay identified the spread of inflation across goods and services as a key concern. The share of items in the Consumer Price Index (CPI) basket recording inflation above 4 per cent rose from 20 per cent in March 2026 to 37 per cent in August and 46 per cent in September, according to the report.
At the same time, the report said there was limited evidence that these pressures had become firmly embedded in companies' pricing decisions, and some MPC members maintained that inflation was largely driven by supply-side factors. Emkay said the minutes supported further gradual hikes, but a significant extension of the tightening cycle remained unlikely without stronger evidence of persistent inflation.
YES Bank: the G7 rate gap matters
A separate report by YES Bank, also reported by ANI on Thursday, said India's interest-rate gap with major developed economies has emerged as an important consideration for monetary policy as the RBI faces rising inflation risks.
Source: ANI via Devdiscourse (YES Bank report)
The report highlighted the importance of maintaining a certain difference between Indian and G7 interest rates to attract foreign debt capital, particularly as the US Federal Reserve is expected to continue its rate-hiking cycle. It quoted Saugata Bhattacharya, an external member of the RBI's MPC, as saying that maintaining a certain gap between India and G7 interest rates is important for attracting debt capital flows.
According to the YES Bank report, the October MPC minutes highlighted growing inflation risks, with the central bank's inflation projection for the third quarter of FY27 reaching 6 per cent — the upper limit of its 2–6 per cent tolerance band. September inflation data showed a broader increase in prices, household inflation expectations rose, and businesses were passing higher input costs on to consumers, the report said. Based on the outlook, YES Bank also expects a cumulative 50-basis-point increase, with 25-basis-point hikes in December and February — again, a forecast, not an RBI decision.
At its October meeting the RBI raised the repo rate by 25 basis points to 5.50 per cent in a unanimous decision, while four of six MPC members supported shifting the stance to calibrated tightening. Growth stayed resilient — GDP grew 7.8 per cent in the first quarter of FY27 — and the next MPC meeting is scheduled for December 2–4, 2026.
Sources: ANI reports of the Emkay Global and YES Bank research notes, carried by The Hindu BusinessLine and Devdiscourse on October 22, 2026.