Business News | RBI May Raise Repo Rate by 100 Bps Through H1 2027: BofA Securities
Get latest articles and stories on Business at LatestLY. The Reserve Bank of India (RBI) may raise interest rates by a total 100 basis points through the first half of 2027, with Bank of America (BofA) Securities bringing forward its forecast for the first rate hike to October from December.
New Delhi [India], September 30 (ANI): The Reserve Bank of India (RBI) may raise interest rates by a total 100 basis points through the first half of 2027, with Bank of America (BofA) Securities bringing forward its forecast for the first rate hike to October from December.
In its latest India Viewpoint report, BofA Securities said it expects the RBI to raise the repo rate by 25 basis points at its October 7 monetary policy meeting. It expects another 75 basis points of hikes thereafter, taking the projected terminal rate to 6.25 per cent.
Also Read | Workday Layoffs: SaaS Provider Eliminating 500 Jobs in 2nd Workforce Reduction in 2026.
The brokerage had earlier forecast a total 50-basis-point increase.
“Our bigger forecast shift is arguably the quantum of hikes, as we are raising our total quantum of hikes from 50bp earlier, to 100bp now,” BofA said.
BofA said the RBI has less reason to wait as domestic growth remains resilient, while inflation risks are becoming broader. It pointed to oil prices staying around USD 100-110 per barrel for most of September, along with rising risks of fuel price increases and food-related supply pressures.
The brokerage expects the RBI to deliver 50 basis points of rate hikes in the fourth quarter of 2026 and another 50 basis points in the first half of 2027.
It also expects the central bank to change its monetary policy stance in December.
“the RBI will switch the stance in December to one of calibrated tightening”, the report said.
BofA said strong economic growth is reducing the need for the RBI to maintain accommodative monetary conditions. Non-food credit growth stood at 17.8 per cent year-on-year in September, while investment demand is expected to remain healthy in the second quarter of FY27.
The report also flagged increasing inflation risks, saying food inflation is becoming more broad-based and wholesale inflation is increasingly spreading to other sectors. Tradables inflation rose to 5.9 per cent in August 2026, it said.
According to the report, the RBI could raise interest rates by more than 100 basis points if real GDP growth remains around 7 per cent and headline inflation stays close to 5.5 per cent.
In such a scenario, front-end rates could rise above 6.5 per cent, BofA said.
However, a major slowdown in economic growth could lead to fewer rate hikes or no hike, the report said. This could happen if growth falls below 7 per cent and moves towards 6 per cent on a forward-looking basis. (ANI)
(The above story is verified and authored by ANI staff, ANI is South Asia's leading multimedia news agency with over 100 bureaus in India, South Asia and across the globe. ANI brings the latest news on Politics and Current Affairs in India & around the World, Sports, Health, Fitness, Entertainment, & News. The views appearing in the above post do not reflect the opinions of LatestLY)