Indian Rupee: RBI seen starting mini hiking cycle - Societe Generale

Societe Generale’s Kunal Kundu expects the Reserve Bank of India (RBI) to respond to India’s broadening inflation pressures with a new mini rate-hike cycle. Kundu projects a 25bp hike in October, followed by two similar moves in December and February. While not its base case, Kundu also flags a non-negligible risk that the RBI could opt for a larger 50bp increase.

Rate hikes projected into early 2027

"The pickup in services inflation is particularly important from a monetary policy perspective."

"With headline inflation above the median target for a third consecutive month and underlying inflation beginning to firm, the room to look through food-led price pressures is narrowing."

"We continue to believe that the RBI will initiate a mini rate-hike cycle, announcing a 25bp hike at its October meeting, followed by two similar increases at its December and February meetings."

"Although this is not our baseline scenario, we also do not rule out a 50bp hike."