India's Central Bank Hikes Rates for the First Time Since 2023 as Inflation Risks Build
HSBC and Goldman Sachs expect the RBI to raise interest rates in December as well.
TL;DR
- RBI increased the benchmark repo rate by 25 basis points to 5.50%.
- This is the first interest rate hike by the RBI since 2023.
- The decision was made to address accelerating inflation, which reached 4.8% in August.
- The RBI has changed its policy stance to 'calibrated tightening'.
- Rate cuts are off the table in the near term; future actions will be hikes or pauses.
- HSBC and Goldman Sachs predict further rate hikes in December.
- India's economic growth forecast was raised to 7.1% for the financial year ending March 2027.
- The country faces risks from geopolitical tensions, trade frictions, and potential El Niño impacts on food prices.
- Global central banks, including the US Federal Reserve and the Bank of Japan, have also been raising interest rates.