RBI could implement 2 rate hikes in 2026 amid sticky inflation: Report

Nomura’s Rob Subbaraman expects the RBI to raise rates in October and December as inflation may exceed 6 per cent. He forecasts 7 per cent FY27 growth, stronger foreign investment, and sees further US Fed tightening amid persistent global inflation pressures

New Delhi: Global financial services firm Nomura’s Head of Global Macro Research, Rob Subbaraman, has said he expects the Reserve Bank of India (RBI) to raise interest rates in both October and December monetary policy meetings as inflation pressures build.

India’s growth remains resilient, with Nomura forecasting 7 per cent GDP growth for FY27, while inflation is expected to breach 6 per cent in the coming months, he said, according to NDTV Profit.

---

Subbaraman highlighted prospects for India to attract more global investment and gain space on the global value-chain chart, particularly through higher-end manufacturing. India holds immense opportunities across sectors but could face laggardness in select sectors if the AI investment narrative remains very strong in the US and Northeast Asia.

India could attract more capital, with FCNR-B deposits seeing stronger-than-expected flows, along with possibility of a strong balance-of-payments surplus, he said. Markets are watching diplomatic developments at the UN General Assembly and the expected meeting between US President Donald Trump and Chinese President Xi Jinping this week.

On global policy, Subbaraman said at least one more US Federal Reserve rate increase is expected this year, likely in December.

He flagged the risk of more increases if inflation remains elevated, adding that the latest FOMC projections point to a broadly hawkish policy direction. Of 18 policymakers, 12 expected one more hike this year; four see two more and only two expect no further increase.

The Fed last week raised its policy rate by 25 basis points to 3.75 per cent–4 per cent. Subbaraman said markets are hoping diplomacy can ease global tensions and US-China trade restrictions that could lower energy costs and long‑term yields.

He noted that Iran retains leverage because high energy prices put pressure on the US economy and warned that elevated fuel costs are squeezing downstream oil businesses with US gasoline prices nearing $4.50 and diesel prices at record highs near $6.50.