Standard Chartered strategists Anubhuti Sahay and Saurav Anand anticipate that the Reserve Bank of India (RBI) will implement a total of 50 basis points (bps) of repo rate hikes in the fiscal year 2027, with the increases split equally between October and December 2026. This forecast marks a shift from their previous expectation of no rate changes, and is attributed to resilient economic activity and hawkish signals from the August Monetary Policy Committee (MPC) minutes [1].
The strategists describe these anticipated hikes as a process of policy normalization from current levels, rather than an aggressive tightening cycle. They note that most MPC members are explicitly open to higher rates if inflationary pressures become more widespread, making an earlier hike more probable. The RBI governor was cited as stating that as inflation normalizes from 2% last year towards 5% in FY27, a recalibration of the repo rate from 5.25% may be necessary [1].
Standard Chartered's FY27 Consumer Price Index (CPI) forecast stands at 4.9%. However, they highlight two key risks to their outlook: if inflationary pressures are stronger than expected, possibly due to ongoing geopolitical tensions, there could be one or two additional hikes; alternatively, the MPC could delay the start of hikes until December, but this could make their reaction appear delayed, especially as the inflation print after the October MPC meeting is likely to rise above 5% [1].
Overall, while Standard Chartered expects some rate increases and acknowledges upside risks to the number of hikes if inflation surprises to the upside, they still see the current hiking cycle as remaining shallow [1].
CONCLUSION
Standard Chartered now expects the RBI to deliver 50bps of repo rate hikes in FY27, split between October and December 2026, as part of a shallow normalization cycle. Upside risks remain if inflation exceeds expectations, but the overall tightening path is seen as limited. Market participants should monitor inflation data and MPC communications for potential changes to this outlook.