New Delhi, October 9: The Reserve Bank of India (RBI) may increase interest rates three more times by June 2027, taking the cumulative hike to 75 basis points, according to an outlook from Goldman Sachs.
Santanu Sengupta, Chief India Economist at Goldman Sachs, expects the rate increases to take place in December, February and either April or June, depending on economic conditions.
Despite the possibility of further rate hikes, India’s economic growth could remain around 7 per cent, the economist said. However, rising crude oil prices and weather-related risks could create challenges for the economy.
Inflation remains a key concern for policymakers, particularly as higher oil prices can increase transportation, production and import costs. The possible impact of El Niño in 2027 could also affect agricultural output, especially the rabi crop, putting further pressure on food prices.
According to the outlook, existing inventory levels may help contain inflation in the near term. However, lower reservoir levels and reduced stocks could increase price pressures next year.
Crude oil prices are another major risk for India’s growth outlook. Sustained prices above $100 per barrel could raise inflation and increase the country’s import bill, putting additional pressure on the economy.
Further interest rate increases could make loans more expensive for households and businesses, while potentially improving returns on some bank deposits. The actual impact will depend on how banks adjust their lending and deposit rates.
The RBI’s future decisions will depend on inflation trends, economic growth and global developments. While further rate hikes remain a possibility, the timing and scale of any increase will be determined by changing economic conditions.
